More than three months after the CEO of Canadian cryptocurrency exchange QuadrigaCX died, apparently taking the keys to $190 million worth of cryptocurrency holdings to his grave, authorities are still trying to recover the money and figure out what went wrong.
Now, one government leader is speaking out, claiming that had Quadriga been based in Bermuda, instead of Canada, the keys to the cryptocurrency would never have been lost. “If Quadriga was licensed under the Bermuda Monetary Authority, what has happened would not have been able to happen, because we have rules regarding the custody of master keys and making sure they’re not held by a particular individual,” Premier David Burt, the leader of the island nation of Bermuda, told Fortune’s Balancing the Ledger.
Burt is referring to Bermuda’s Digital Asset Business Act 2018, which took effect late last summer, part of a legislative framework the country has enacted to encourage fintech and cryptocurrency businesses to set up shop on the island. “It basically states what you have to do with the master keys, how those things have to be handled, and making sure that they cannot be lost, or if they are lost, there’s a way for that recovery to happen,” he explained.
So far, Bermuda regulators have allowed 74 fintech companies to incorporate there, though it just approved its first cryptocurrency exchange, Omega Dark, last week. The fintech companies operating in Bermuda also include a compliance-focused subsidiary of Binance, a Hong Kong-based cryptocurrency exchange.
While the country is seeking to attract more such businesses, companies will have to pass a “very stringent test” in order to prevent disasters like the one at Quadriga, the Premier added. “We recognize that any reputational damage from scams or otherwise can have an impact on our traditional financial services sector,” he said, “and we don’t want that, I would call it, cross-contamination.”