With the advent of this technology, the market has seen the proliferation of currency blockchains like Bitcoin (BTC), smart contract blockchains like Ethereum (ETH and ERC20), and the creation of Utility tokens like Binance Coin (BNB) where you can use tokens in lieu of payment for execution.
Within finance, the use of blockchain technology can range from identity verification (AML / KYC), structuring for capital markets transactions (debt, equity, hybrid structures), and trading of digital securities with custody and banking also part of the process. The Commonwealth of Bermuda will enable and allow for secure blockchain application by providing a robust regulatory framework.
The use cases for this technology in Bermuda primarily focused on the evolution of the capital market system. Three key benefits for this technology will be:
- Digital Identity (AML/KYC): The system will provide a “Gold Standard” of legitimacy for participants in the network so investors, issuers and regulators know their counterparties.
- Structuring: The exploration of various structures given the flexibility of this technology provides greater utility and will ultimately lower transaction costs for participants. The technology provides greater transparency to investors in the form of access to the library of investor documentation, governance, and ultimately pricing of assets providing active managers a gain in efficiency.
- Democratization of Capital: The network effect for issuers will be access to a greater pool of investors that are all seeking some risk adjusted return. Based on this profile, deals can be vetted and acted upon by a broader set of investors thus providing issuers a lower cost of capital.