I first met Loretta Joseph at the CogX conference at Tobacco Dock in London’s Wapping last June. I recently caught up with her via a WhatsApp call when she was in Istanbul en route from Mauritius to Serbia.
As a former banker, with 25 years of experience, she has advised international banks, hedge- and pension-funds on managing portfolio and exposure to derivatives and related products. She has worked for investment banks in Asia and Europe and consequently holds expertise in financial markets, multiple asset classes and emerging market environments.
In January 2018, she and a group of blockchain enthusiasts were asked by Bermuda’s premier, David Burt, at the World Economic Forum in Davos to fly to the British island territory and advise on regulations. This was the start of a whirlwind 18 months, advising the governments of Malta, Mauritius, Nigeria, Antigua & Barbuda and Serbia.
Commodities not currencies
“I have been involved with blockchain technology since 2013. And it is clear to me that blockchain is the Fourth Industrial Revolution. This underlying technology has the potential to solve real-world problems that we are facing today. It will have a tremendous impact and deeply change the public- and private-sector,” says Joseph.
“Among other things, I helped facilitate regulations around bitcoin and crypto currencies in Australia. And as we start off, let’s be honest, we are not talking of money. Let us be clear that cryptocurrencies are commodities, not currencies. They are a new asset class and it is called a digital-asset commodity. It is like a barter system. And cryptocurrencies are one of the many applications of the blockchain technology.
“The big win of blockchain is to make data secure. Bitcoin was the first security protocol that came out of this technology. What bitcoin solved, was the ability to move data securely for the first time. As for the internet, there are 27 protocols and it is not secure.
“Over time, every corporation and government’s database has been centralised and compromised in some way. Bitcoin is the only database that has never been compromised. So, in the future, using blockchain, there will be a structure that will be so secure that it will be impenetrable. And it will just become normal infrastructure we won’t even be talking about in ten years.”
Bermuda ahead of the pack
In May 2018, with Joseph as a key team member, Bermuda became the first country to pass cryptocurrency regulations. Spurred by blockchain, countries around the world are taking note. But it may be parts of the Commonwealth, including small developing states, that are poised to benefit the most.
The Commonwealth is a political grouping of 53 independent and equal sovereign states, including advanced and developing economies, and home to a population of around 2.4 billion. Thirty-one of the members are small states, many of which are island nations such as Bermuda.
Although there are certain differences, Bermuda’s laws – as is the case in most of the Commonwealth – are based on English laws. This means that the Commonwealth members that are small states (with a population usually under 1.5 million), and those that are small island developing states, can theoretically adopt the same legal regulations that Bermuda has just passed. One way of doing this is by creating treatises of technology, so that the laws only have to be created once and can then be shared.
“I’ve been in global financial services for more than 25 years, and I’ve never seen a start-up move this quickly – let alone a country,” Joseph says. She asserts that what makes Bermuda different is strong political will and an openness to collaborate among banks, policymakers and the government.
Ripple effect through the Commonwealth
Bermuda keeps on innovating, and is setting itself up to be a global leader in the financial technology space. It recently passed a digital assets act, which regulates cryptocurrency wallets, and is now looking into electronic-identification legislation – all of which could one day, with the right momentum, spread through the Commonwealth.
“Developing countries are where blockchain and regulations have the biggest potential to take off because in developing countries, especially the small ones, there’s enough room to innovate, whereas it’s very hard to change laws in developed countries,” says Joseph.
“Maybe the starting point for this vision is getting the countries I’ve worked with in the same room and working together. Nobody has the answer but small countries such as Bermuda and Mauritius are nimble countries that can lead the way. When regulators and industries work together, they share knowledge and engage in capacity-building. And the standards that they build together are better adapted for everyone.”
Dashing to catch her flight to Belgrade, Joseph’s concluding comment is: “Legislators need to set aside their differences, and anachronistic views on centralisation, and instead show up and collaborate.”
Loretta Joseph, fintech and regulatory government advisor, in conversation with James Bowater. Her LinkedIn
IIMPORTANT INFORMATION: THE VIEWS AND OPINIONS PROVIDED BY CITY A.M.'S CRYPTO INSIDER AND IN THE CRYPTO A.M. SECTION SHOULD NOT BE TAKEN AS INVESTMENT OR FINANCIAL ADVICE. ALWAYS CONSULT WITH YOUR FINANCIAL ADVISOR.