West Indian fintech startup Bitt has entered a Memorandum of Understanding (MoU) with Sint Maarten and the Central Bank of Curaçao (CBCS) to explore the possibilities and advantages of introducing a state-backed digital currency.
As indicated in an official press release, dated Aug. 12, the MoU will be primarily used to facilitate the transfer of knowledge and funds between consented parties to develop and implement a cryptographic financial vehicle for the jurisdictions of Curaçao and Sint Maarten.
The bank is looking to reduce its reliance on paper-based fiat money in favor of a digital financial system for uninterrupted, fast and traceable transactions between the islands. That said, Bitt is on board to integrate a blockchain-based settlement system with a robust KYC and AML dataset to realize the bank’s mission.
Rawdon Adams, CEO of Bitt, expressed his thoughts on the partnership:
“The MOU clears the way for collaboration and information sharing regarding a feasibility study, designed to determine the viability and functionality of using a central bank-issued digital guilder within the financial ecosystems of each member, and across both members of the monetary union.”
Digital Benefits Voiced
The plan is forward-thinking and progressive on paper, with Adams stating that the task to create and distribute fiat money between the two islands is both challenging and costly.
In contrast, digital currency is cheap to maintain, easy to create and transfer and small amounts can be easily held on mobile phone wallets, which allows for secure transfers.
Adams was appointed to serve as Bitt’s CEO in 2017 in a move to augment the company’s strategies in the region. In the same year, Bitt partnered with the Barbadian central bank to pilot several blockchain-based projects.
Bitt, meanwhile, is a wholly-owned fintech subsidiary of Overstock.com, an online retailer that has put major weight and funding into blockchain. In 2014, Overstock became one of the first major retailers to accept bitcoins in exchange for goods and services.
Contrasting Opinions from All Fronts
While the CBCS shows noteworthy acceptance of implementing blockchain technology and tokenized money in its framework, the divisional director of the Dutch Central Bank said that he believes a CBDC can never work due to the volatility of cryptocurrencies and the possibility of customer risks.
Meanwhile, acting president of the CBCS, Leila Matroos-Lasten, stated:
“The CBCS herewith recognizes the transformative potential of innovation and technology and is committed to exploring solutions regarding the efficiency of cross-jurisdictional transactions and digital payments whilst ensuring compliance and security assurances obtained by these state of the art (fintech) solutions. This would be beneficial to everyone.”
Banks in developing regions are quick to embrace cryptocurrency in times of crisis. For example, in July 2018, Iran surprised the world by announcing its state-issued cryptocurrency to circumvent U.S. sanctions. The unnamed digital token will be used to transfer money anywhere in the world and help during foreign imposed sanctions, according to Alireza Daliri, deputy head of Iran’s Directorate of Technology Affairs.
Cover Photo by Saffu on Unsplash