An In­ter­na­tion­al Mon­e­tary Fund (IMF) tech­ni­cal as­sis­tance re­port on T&T, has found that there is in­ter­est among pri­vate sec­tor par­tic­i­pants in pro­vid­ing cryp­to-bro­ker ser­vices in this coun­try.

It al­so not­ed that there ap­pears to be in­ter­est by pri­vate firms in in­stalling cryp­to ATMs lo­cal­ly and that a firm had ex­pressed in­ter­est in de­vel­op­ing a crowd­fund­ing plat­form.

The re­port was post­ed by the Cen­tral Bank of T&T (CBTT) last week on Sep­tem­ber 7, two days af­ter the Cen­tral Bank and the T&T Se­cu­ri­ties and Ex­change Com­mis­sion host­ed a high-lev­el pan­el on ‘Con­sid­er­a­tions in cryp­to as­set reg­u­la­tion.’

Ac­cord­ing to the IMF re­port, cryp­to bro­kers of­fer users a range of ser­vices re­lat­ed to cryp­to as­sets, not­ing that such bro­kers have a sim­i­lar ap­proach to the pro­vi­sion of ser­vices to their cus­tomers as bro­kers in tra­di­tion­al in­vest­ment ac­tiv­i­ties.

In par­tic­u­lar, the IMF stat­ed that bro­kers can pro­vide ad­vice on the ac­qui­si­tion and sale of cryp­to as­sets, and act on their clients’ in­struc­tions, ac­cord­ing to the spe­cif­ic needs and in­ter­ests of clients.

“There is in­ter­est among pri­vate sec­tor par­tic­i­pants in pro­vid­ing cryp­to bro­ker ser­vices in T&T,” the re­port added.

The IMF mis­sion re­port stat­ed: “In meet­ing with firms util­is­ing fin­tech, trade bod­ies, and pub­lic au­thor­i­ties, we found that the im­pact of fin­tech is not yet broad based and is per­me­at­ing pri­mar­i­ly in re­la­tion to e-mon­ey and pay­ment ser­vice providers (PSP), and more slow­ly in oth­er ar­eas such as crowd­fund­ing, robo-ad­vice, and cryp­to as­sets.

“While da­ta on the im­pact of fin­tech are lim­it­ed, we use pub­lic in­for­ma­tion, con­ver­sa­tions with au­thor­i­ties and mar­ket par­tic­i­pants, and ap­pli­ca­tions for li­cens­ing and out­reach for reg­u­la­to­ry sup­port as guides, which sug­gest that fin­tech re­mains rel­a­tive­ly con­cen­trat­ed.”

In de­tail­ing how the re­port came about, the IMF said at the re­quest of the CBTT and the T&T Se­cu­ri­ties and Ex­change Com­mis­sion (TTSEC), a Mon­e­tary and Cap­i­tal Mar­kets (MCM) de­part­ment mis­sion, sup­port­ed by its le­gal de­part­ment con­duct­ed desk-based ca­pac­i­ty de­vel­op­ment.

The mis­sion vis­it­ed Port-of-Spain in-per­son dur­ing April 26 to 28, 2023, to as­sist the CBTT to im­prove its li­cens­ing and su­per­vi­so­ry regime for e-mon­ey, and im­prove its in­sti­tu­tion­al arrange­ments for fin­tech reg­u­la­tion.

The mis­sion al­so sup­port­ed the TTSEC by car­ry­ing out a desk-based re­view to de­ter­mine the ef­fi­ca­cy of its ex­ist­ing leg­is­la­tion in re­la­tion to fin­tech, while al­so pro­vid­ing high-lev­el tech­ni­cal as­sis­tance (TA) on the pru­den­tial and con­duct reg­u­la­tion of cryp­to as­sets.

The re­port al­so not­ed that this coun­try’s le­gal regime for se­cu­ri­ties is mod­ern and com­pre­hen­sive, adding that the 2012 Se­cu­ri­ties Act and suc­ces­sive amend­ments, em­body an ap­pro­pri­ate ap­proach to the reg­u­la­tion of se­cu­ri­ties, in­clud­ing le­gal pro­vi­sions and sec­ondary leg­is­la­tion for mar­kets and in­ter­me­di­aries.

How­ev­er, it stat­ed that in­vest­ment ac­tiv­i­ties, par­tic­u­lar­ly in the fin­tech area, are evolv­ing at a faster pace than the leg­isla­tive de­sign. There are ac­tu­al and pro­ject­ed busi­ness ac­tiv­i­ties in T&T that raise com­plex ques­tions on the ap­plic­a­bil­i­ty of se­cu­ri­ties laws.

“Al­though the se­cu­ri­ties reg­u­la­tion regime in T&T is re­cent and has been reg­u­lar­ly up­dat­ed, in­creas­ing busi­ness ac­tiv­i­ty around cryp­to as­sets risks re­sult­ing in the emer­gence of a whole eco­nom­ic sec­tor that re­ceives the in­vest­ment of the pub­lic and is com­plete­ly un­reg­u­lat­ed.

“The new busi­ness mod­els in­cor­po­rate cut­ting-edge tech­nolo­gies, such as dis­trib­uted ledger tech­nol­o­gy (DLT), and mir­ror de­vel­op­ments in oth­er coun­tries, where the de­bate on the reg­u­la­tion of cryp­to as­sets is on­go­ing,” the re­port ex­plained.

It fur­ther not­ed that new busi­ness mod­els re­volve around cryp­to as­sets, adding that sev­er­al of the busi­ness ac­tiv­i­ties that are be­ing con­duct­ed, or that are planned for ex­e­cu­tion in T&T, re­fer to cryp­to as­sets, and in par­tic­u­lar, un­backed cryp­to as­sets such as Bit­coin or Ether.

These cryp­to as­sets, the IMF mis­sion said, can be de­scribed as “dig­i­tal rep­re­sen­ta­tions of val­ue.”

It ex­plained that they do not nec­es­sar­i­ly fall un­der the con­cept of “se­cu­ri­ty” but are be­ing used for spec­u­la­tive in­vest­ment.

Not­ing that cryp­to ex­changes al­so al­low users to buy and sell cryp­to as­sets, the IMF stat­ed that some of these ex­changes ap­pear to be op­er­a­tional in T&T or ac­ces­si­ble from T&T (for in­stance, Coin­base, Bi­nance, and Krak­en).

Ac­cord­ing to the re­port, ex­changes al­low users to sell their cryp­to as­sets, such as Bit­coin, for Trinida­di­an dol­lars, or for oth­er sup­port­ed fi­at cur­ren­cies, as well as buy­ing Bit­coin and oth­er cryp­to as­sets with Trinida­di­an dol­lars.

It added that ex­changes can act as mar­ket mak­ers, ad­ver­tis­ing process­es for ac­qui­si­tion and sales, and charg­ing trans­fer fees to users. Ex­changes, how­ev­er, can al­so act as a plat­form where users trans­act di­rect­ly with each oth­er (peer-to-peer trad­ing plat­forms, for in­stance, Lo­cal­Bit­coins and Pax­ful) the IMF said.

The re­port al­so found that there ap­pears to be in­ter­est by pri­vate firms in in­stalling cryp­to ATMs in T&T.

It ex­plained that a Bit­coin ATM (Au­to­mat­ed Teller Ma­chine) is a kiosk that al­lows a per­son to pur­chase Bit­coin by us­ing cash or a deb­it card, adding that these ATMs and oth­er cryp­to kiosks are present in many ju­ris­dic­tions.

The re­port added that the most ad­vanced Bit­coin ATMs of­fer dual func­tion­al­i­ty en­abling both the pur­chase and the sale of Bit­coin for cash.

On the is­sue of crowd­fund­ing, the IMF said this is an emerg­ing busi­ness ac­tiv­i­ty that may ben­e­fit from in­no­v­a­tive tech­nolo­gies adding that par­tic­u­lar­ly, in the fin­tech con­text, this can be struc­tured as a plat­form that con­nects en­tre­pre­neurs in need of fi­nanc­ing with in­vestors.

It was al­so ad­vised that the plat­forms can se­lect high-po­ten­tial en­tre­pre­neur­ial projects and al­low them ac­cess to the par­tic­i­pat­ing in­vestors.

“The plat­form can al­low in­vestors to use cash or cryp­to as­sets to ac­quire any kind of in­vest­ment in­stru­ments, in­clud­ing bonds and shares, is­sued by the com­pa­nies run­ning the se­lect­ed busi­ness projects.

“As plat­forms and in­vestors tend to be as­so­ci­at­ed with the dig­i­tal econ­o­my, these plat­forms tend to con­cen­trate their in­ter­est in in­no­v­a­tive busi­ness ven­tures,” the re­port stat­ed.

Al­so, it said these may of­ten make use of to­keni­sa­tion to pro­mote their goods and ser­vices.

“In the end, it is quite pos­si­ble that com­pa­nies is­sue to­kens (which may rep­re­sent shares or may al­so rep­re­sent “util­i­ty to­kens”) in ex­change for cryp­to as­sets or fi­at mon­ey.

“The plat­forms al­low in­vestors to ac­quire to­kens is­sued by busi­ness­es and of­fer in­vestors liq­uid­i­ty, as they can al­so use the plat­forms to sell their to­kens,” the re­port fur­ther ad­vised.

Re­gard­ing the Caribbean, it not­ed that it is one of the most dy­nam­ic re­gions in cryp­to ac­tiv­i­ties, and there are sev­er­al mod­els for the reg­u­la­tion of such ac­tiv­i­ties.

Ac­cord­ing to the re­port, there are am­ple leg­isla­tive and reg­u­la­to­ry ac­tiv­i­ties in the re­gion in the fin­tech area.

It stat­ed that de­spite be­ing im­pact­ed by some re­cent fail­ures, such as the FTX bank­rupt­cy with its con­nec­tions to the Ba­hamas, the Caribbean is still per­ceived as one of the most at­trac­tive ar­eas for de­vel­op­ers of cryp­to busi­ness­es.

There­fore, the re­port ad­vised that to as­sess the abil­i­ty of the le­gal regime to reg­u­late the new busi­ness mod­els, it is use­ful to have a com­par­a­tive overview of le­gal de­vel­op­ments in the re­gion.

How­ev­er, it not­ed that the leg­isla­tive regime of T&T does not cov­er cryp­to as­set ac­tiv­i­ties.

The re­port said as op­posed to some of the oth­er ju­ris­dic­tions in the Caribbean that have de­vel­oped spe­cif­ic le­gal regimes for cryp­to as­sets, in T&T there is no spe­cial con­sid­er­a­tion of cryp­to as­set ac­tiv­i­ties by way of spe­cial leg­is­la­tion, spe­cial reg­u­la­tion, or amend­ments in the gen­er­al regime that tar­get this type of busi­ness­es.

Fur­ther, the IMF stat­ed that the leg­isla­tive regime of T&T does not cov­er cryp­to as­set ac­tiv­i­ties.

It said as op­posed to some of the oth­er ju­ris­dic­tions in the Caribbean that have de­vel­oped spe­cif­ic le­gal regimes for cryp­to as­sets, in this coun­try there is no spe­cial con­sid­er­a­tion of cryp­to as­set ac­tiv­i­ties by way of spe­cial leg­is­la­tion, spe­cial reg­u­la­tion, or amend­ments in the gen­er­al regime that tar­get this type of busi­ness­es.

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