I have spent the last eighteen months crisscrossing the globe, putting in more air miles than I have thought possible while working to launch our company. The cross-border nature of today’s financial system means that more and more we are looking beyond one country or region to build truly global companies from the start.
Looking back through my recent passport stamps and boarding passes, a common theme that we identified in mid-2018 reveals itself through nearly all of the places where I have been. Whether it is the United Kingdom, Singapore, Hong Kong, Malta or our registered country of Mauritius, many of the jurisdictions at the front of fintech and digital asset innovation are members of the Commonwealth.
The Commonwealth – generally, but not exclusively, has historic ties to the British Empire – is currently made up of 53 countries and 2.3 billion people. This is nearly one-third of the world’s population and includes developing and developed economies. There are also nearly two dozen British Overseas Territories which have a separate legal status but operate much like commonwealth states. These include many islands such as Bermuda, Cayman Islands and Anguilla.
Whether it is the United Kingdom, Singapore, Hong Kong, Malta or our registered country of Mauritius, many of the jurisdictions at the front of fintech and digital asset innovation are members of the Commonwealth.
Commonwealth institutions are looking to each other for ways to innovate. There are many reasons for this, but I believe three are the most important.
Common system of laws
Commonwealth nations and territories have a legal system based on common law, a legal system with a history going back hundreds of years. While independence has brought some divergence, the fundamentals of the law remain largely the same. This means transferring work from one jurisdiction to another is relatively simple.
All Commonwealth nations have traditions with speaking the English language. As the global language of trade, this gives a common way to share ideas and legislation without the need for translation. Although many members of the Commonwealth have additional spoken languages, most legislation continues to be produced in English.
This is simultaneously the most important and easiest to overlook reason promoting harmonization. More than two dozen members of the Commonwealth, from tiny Malta to slightly larger Cyprus, have established financial service businesses. These jurisdictions have different specialities from alternative investment funds in Malta to the trusts of Singapore. But they have a common history trying to build institutions across borders.
For companies involved in cryptocurrency and other emerging areas of finance, the emergence of fintech legal frameworks is a particularly exciting development. First introduced by the Bermuda Monetary Authority, new legislation is arriving and evolving rapidly amongst Commonwealth nations in a conscious attempt for these jurisdictions to pave the way for fintech companies to creating new and compliant standards for the financial services industry in a digital age. The legislation provides regulatory clarity for companies to deal with digital assets, utilize new technologies such as distributed ledger technology and launch token offerings.
Mauritius has quickly followed in the footsteps of Bermuda. Singapore and other countries are looking to follow. Rather than having to draft legislation from scratch, the existing links between Commonwealth nations and territories is allowing for this positive change to happen faster. It should also allow for easier adjustments to the regimes as the needs evolve.