Where does cryp­tocur­ren­cy fit in­to the reg­u­la­to­ry frame­work of T&T?

The Cen­tral Bank has been search­ing for this an­swer. On Tues­day it host­ed a pan­el dis­cus­sion ti­tled Con­sid­er­a­tions in Cryp­to As­set Reg­u­la­tion along­side the T&T Se­cu­ri­ties and Ex­change Com­mis­sion (TTSEC).

In the dis­cus­sion at the Cen­tral Bank Au­di­to­ri­um, Cen­tral Bank Gov­er­nor Dr Alvin Hi­laire ad­mit­ted that he, and much of the pub­lic, were still very much learn­ing about the nu­ances of cryp­tocur­ren­cies and as such had to be cau­tious with re­gard to the rules that should gov­ern it in T&T.

“Some­times if we don’t know what we are talk­ing about, we don’t know what to reg­u­late, we don’t know if we are do­ing it right or wrong,” said Dr Hi­laire.

In­deed, he ad­mit­ted the Cen­tral Bank had been weigh­ing the pros and cons of var­i­ous ap­proach­es.

“Ban, con­tain or reg­u­late?” Hi­laire asked, “Ban it! You say you don’t want any part of it. Well, what does that mean? Can you en­force it? That is a prob­lem. You may be able to ban it be­cause you have noth­ing to do with it. But then you may not be able to en­force that ban, and if not, well, what are you do­ing?

“Con­tain is sort of like ban­ning but you’re look­ing at it more in a niche sense. You’re try­ing to just cor­don it off or quar­an­tine it and make it just deal with one par­tic­u­lar as­pect in which case you may be able to get some­thing more out of it. But some­times it could be very com­plex where ex­act­ly the line is drawn etc.

“The oth­er way is reg­u­late. To reg­u­late is more nu­anced. It re­quires more work and may be able to get cer­tain things out of this. You could al­low in­no­va­tion, be­cause in ban­ning now you will not be able to al­low any in­no­va­tion. But some­times stan­dard­i­s­a­tion of these reg­u­la­tions could be a prob­lem.”

Hi­laire not­ed that there was no stan­dard ap­proach across the globe as coun­tries have tak­en var­i­ous ap­proach­es from El Sal­vador adopt­ing cryp­to as a le­gal ten­der out­right where­as Chi­na opt­ed not to adopt cryp­to any fur­ther.

How­ev­er, in terms of fi­nan­cial in­clu­sion, the Cen­tral Bank Gov­er­nor not­ed that there were ben­e­fits to hav­ing a pro­gres­sive ap­proach to cryp­to.

“It could be less cost­ly to make trans­ac­tions. Trans­ac­tions can be very quick. You have ac­ces­si­bil­i­ty. Peo­ple can move very quick­ly in a lot of this, de­cen­tral­i­sa­tion and so forth. It al­so pro­motes fi­nan­cial in­clu­sion. But, to a large ex­tent, most peo­ple just say well, we can make a lot of mon­ey out of it. But there are risks in­volved in deal­ing with this ac­tiv­i­ty,” said Hi­laire who ex­plained that these risks could spi­ral out of con­trol and af­fect oth­er arms of the fi­nan­cial sec­tor if left unchecked.

“Very quick­ly, what do these risks rep­re­sent? You could have a whole macro-eco­nom­ic sit­u­a­tion that could be prob­lem­at­ic. Cen­tral banks are al­ready ac­cus­tomed to deal­ing with mon­e­tary pol­i­cy and con­trol­ling the sup­ply of mon­ey and so forth.

“If you have a pri­vate in­stru­ment, then you can’t do that. So you can have a macro-eco­nom­ic prob­lem that you’re deal­ing with, and fi­nan­cial sta­bil­i­ty to the ex­tent that peo­ple get this heav­i­ly in­to this ac­tiv­i­ty, then it could mean it has links to the for­mal fi­nan­cial sec­tor, your banks, in­sur­ance com­pa­nies, etc. And some­thing that starts in one area could spill over to an­oth­er,” he said.

He how­ev­er not­ed that if left un­reg­u­lat­ed the mar­ket could al­so at­tract the low de­nom­i­na­tors or in­di­vid­u­als will­ing to ex­ploit the free­dom af­ford­ed by the lack of reg­u­la­tion.

Mark Pereira, CEO of Zed Labs, rep­re­sent­ed the cryp­to com­mu­ni­ty at the dis­cus­sion, and he re­vealed that the cur­rent sta­tus of cryp­to in T&T had left the fi­nan­cial sit­u­a­tion frag­ment­ed.

He said that many peo­ple with tal­ent in the fi­nan­cial space were now work­ing with for­eign en­ti­ties as they could not find ways to be in­te­grat­ed in­to the lo­cal space at the mo­ment.

He said the cur­rent un­cer­tain en­vi­ron­ment has put a strain on the lo­cal banks as for­eign ex­change pres­sure ex­ert­ed by the cryp­to mar­ket ad­verse­ly af­fect­ed them.

Pereira ex­plained that this was the main rea­son lo­cal banks opt­ed not to do busi­ness with lo­cal cryp­to-cur­ren­cy in­vestors.

“I don’t dis­like the banks. I just don’t like be­ing treat­ed like I am a crim­i­nal,” he stat­ed. Periera has been con­duct­ing busi­ness in cryp­to since 2018. He ex­plained he had ini­tial­ly been able to do trans­ac­tions lo­cal­ly un­til an un­savoury trend soured the re­la­tion­ship be­tween lo­cal cryp­to-min­ers and the banks.

“One day I got com­plete­ly shut out...be­cause peo­ple were us­ing the US lim­its on their cred­it cards to pur­chase and they were tak­ing that mon­ey, mak­ing a prof­it off of it bring­ing it to their banks then prof­itting off the spread. So it was less about cryp­tocur­ren­cy con­ver­sa­tion and more of a forex con­ver­sa­tion,” he ex­plained.

The Cen­tral Bank Gov­er­nor ad­mit­ted that at a re­cent meet­ing with the Bankers As­so­ci­a­tion of T&T, the banks main­tained a stance of cau­tion con­cern­ing the adop­tion of cryp­tocur­ren­cies.

Lystra Lu­cil­lio, act­ing CEO of the T&T and the T&T Se­cu­ri­ties and Ex­change Com­mis­sion, served as the third mem­ber of the pan­el.

She not­ed that re­gion­al re­search had list­ed T&T’s fi­nan­cial in­clu­siv­i­ty among the high­est in the re­gion, but she said that there ap­peared to be lit­tle up­take con­cern­ing cryp­tocur­ren­cies at the grass­roots lev­el just yet.

“Gen­er­al­ly, with­in the world, they saw that T&T had very lit­tle ac­tiv­i­ty when it came to this. So peo­ple might be in­ter­est­ed, but we are not see­ing a large per­cent­age in­vest­ing what you have. But gen­er­al­ly, they found in this par­tic­u­lar re­port that the emerg­ing coun­tries are the ones who ac­tu­al­ly adopt­ed the cryp­tocur­ren­cy and cryp­to as­sets faster than any oth­er parts of the world,” said Lu­cil­lo, who al­so con­duct­ed a dig­i­tal sur­vey at the pan­el dis­cus­sion on the par­tic­i­pans views on cryp­tocur­ren­cy.

The sur­vey saw a split be­tween peo­ple who said they were def­i­nite­ly in­ter­est­ed in cryp­tocur­ren­cy and peo­ple who felt they did not know enough. Those def­i­nite­ly in­ter­est­ed ac­count­ed for 45 per cent of the re­spon­dents with those who said did not know enough ac­count­ing for 44 per cent. The re­main­ing 11 per cent said cryp­tocur­ren­cy was too risky.