- Bermuda is testing a digital currency for distributing financial aid.
- The token, dubbed the Bermudian Dollar Token, is being issued by Stablehouse.
- Stablehouse boasts having ex-Tether executive Phil Potter as an advisor.
Bermuda is trying on for size a Bermudian dollar-backed stablecoin.
In partnership with Stablehouse, a startup that touts itself as a “global digital currency clearinghouse” for the exchange of stablecoins, the Government of Bermuda announced today that it has launched a digital stimulus token pilot.
Stablehouse, a Bermuda-based startup, which boasts as an advisor a former executive of Tether—the firm that issues the world’s most popular and controversial stablecoin—is providing the technical expertise along with the token, dubbed the Bermudian Dollar Token, or BMDT.
Bermuda wants to explore how well merchants take to accepting digital tokens as a form of payment and whether residents of the 21-square-mile island will be open to using them to purchase food and other essential items.
Right now, the Government of Bermuda has rallied some three merchants and 20 individuals, who are issued a stipend of free BMDTs to test out the project, Denis Pitcher, chief fintech advisor to the Premier of Bermuda, told Decrypt.
“We are starting very small and gradually expanding as we go,” he said. “Our ultimate goal is to end up with a wallet on every phone because wallets are the browser of the future when it comes to money and the future of finance.”
As for its role in the partnership, Stablehouse is providing point-of-sale terminals for the merchants and the use of its “Green Wallet,” which allows users to store coins offline. The firm is also handling the issuance and redemption of BMDT. (Each token is backed by an actual Bermudian dollar, the native currency of the island, which itself is pegged to the U.S. dollar.)
The token runs on Blockstream’s Liquid—a “sidechain” protocol designed to link together exchanges. (A version of Tether, coincidentally, also runs on Liquid.)
Bermuda’s stimulus token project—which has been in development since late last year—is part of the island's wider goal to bring a digital currency to all its 60,000 inhabitants.
In October, Bermuda said it would allow residents to pay taxes and fees in U.S. dollar-pegged stablecoins. “We want to drive greater adoption of digital currencies on the island. And one of the best means is to look at what people use today and that is Bermuda dollars,” said Pritcher.
He says those plans have been accelerated due to the COVID-19 outbreak because digital dollars could allow a faster, more effective dissemination of financial aid to the population.
When it came to stimulus funds, he said, the Bermuda government quickly realized the challenges of disseminating money to people who did not have bank accounts. Digital currency has the advantage of letting you validate that you have distributed the correct amount to the correct individual, he said.
Stablehouse, which launched last year, is led by Interim CEO Philippe Bekhazi, founder of cryptocurrency finance firm XBTO. Its advisory board includes Phil Potter, former Bitfinex and Tether chief strategy officer; David Namdar, a founding partner of Galaxy Digital; and Samson Mow, chief strategy officer at Blockstream.
While Bermuda's Pitcher sees the digital stimulus token pilot as a way to carefully validate the technology behind the token, Bekhazi has a loftier goal. In a statement, he said: “Together, with the Government of Bermuda, we aim to set a benchmark for all governments around the world to pursue digital stimulus solutions.”