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- The involvement of Bahamian authorities in the FTX-saga is questionable in itself.
- Their complicity hampered their CBDC, Sand Dollar.
- Project manager blames pandemic for slow growth.
The once third largest crypto exchange FTX fell like a huge tree in the crypto forest, breaking smaller trees in the vicinity, crushing the shrubs and grass underneath, and shaking the very foundations of the industry. FTX had a very close connection with the Bahamas, but the Sand Dollar is paying the price after the collapse.
A digital version of the Bahamian dollar, the Sand dollar, is believed to be in a very tough spot, especially after the sudden FTX collapse.
Headquarters, mansions, and condos for the FTX officials were all in the island nation. They filed for bankruptcy on November 11; this incident made the world look at the Bahamas with stern eyes. Though it is considered any publicity is good publicity, but not for the Bahamas, and certainly not such negative attention. Moreover, owing to the relation with FTX, the Securities Commission of the Bahamas has been scrutinized and could be subjected to future legal proceedings.
The Bahamian regulator initially pressed that the insolvency proceedings should be carried out in the nation, but after facing much backlash, where the lawyers claimed that the commission had coordinated with SBF to allow him “unauthorized access” to FTX systems to transfer assets to his custody.
These efforts by the island nation to safeguard SBF made a dent in their reputation, making them synonymous with the crypto crash. Before all this puzzle, the country was a forerunner in digital fiat.
In October 2020, the country rolled out The Sand Dollar, becoming the world’s first CBDC. It gained traction at a slower-than-expected pace but completely stalled after the FTX collapse.
The project manager for digital currency implementation at the Central Bank of the Bahamas, Kimwood Mott, blamed covid-19 pandemic for humdrum performance. The island nation was closed for months during the pandemic, and the promotion of CBDC was affected.
“I am always telling people that it is not a cryptocurrency. But if people don’t know what a cryptocurrency or a CBDC is, then I’m making a statement.”
Many who support Sand Dollar feel that its implementation and adoption could help the central bank in a wide variety of systemic objectives, like ensuring financial inclusion, reducing money laundering and fraud, and becoming a sovereign alternative for digital payments. The government could immediately send funds to isolated people if a natural disaster happens.
Now to gain the benefits of all these, educating the general population regarding the crypto industry is a must.
Apart from the Bahamas, 10 countries have entered the CBDC club, including Nigeria, Austria, China, Argentina, etc. and 105 countries that managed to represent 95% of the global GDP are also exploring the possibilities of CBDCs.
Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.
