NASSAU, BAHAMAS — Attorney General Ryan Pinder said yesterday that it is now time for the financial services industry to “innovate again” as he warned that this nation could lose a significant number of funds licensed in The Bahamas as a result of tax policy to be introduced imminently by Brazil.
While addressing the Nassau Conference, Pinder noted that the ICON, developed jointly between The Bahamas Government, the Bahamian financial services industry, and the Brazilian legal community, is now under threat.
Pinder pointed out that ICON created another influx of licensed funds originating from Brazil, providing a product that was structurally familiar to the investment condominium in Brazil. As a result of these innovations, a material amount of funds licensed in The Bahamas originated from Brazil.
“This is now all at risk due to tax changes that are proposed in Brazil. Brazil is close to passing controlled foreign corporation laws which would eliminate any tax benefit of holding financial investments in an offshore fund. We could end up losing a material amount of funds in The Bahamas, with clients unwinding their structures before year-end. We enjoyed the prosperity of our innovation for 10 years; it is now time to innovate again,” said Pinder.
Regarding the digital assets sector, Pinder noted that The Bahamas enacted a world-leading legislative framework regulating digital assets business and the issuance, sale and trade of digital assets. He stated that The Bahamas drew the attention of many companies in the cryptocurrency industry, known to be a highly volatile industry at its juvenile stage of development.
“Our innovation in this area resulted in almost immediate growth and success,” said Pinder. Referring to the collapse of crypto giant FTX, which was headquartered in The Bahamas, Pinder said: “Of course we all know what happened, a major insolvency had a material effect on the growth trajectory of the industry in The Bahamas, although we should recognize significant licensees remain in The Bahamas.
“The industry is still viable. I view the industry as not just a cryptocurrency-related industry, but a fintech industry,” Pinder said.
“The components of the fintech industry move and evolve so quickly that we shouldn’t view it as a single component. We should view it as a transformational fintech industry where we want to continue to innovate and continue to lead from the front. This is important for the continued viability of The Bahamas as a financial center,” he said.