Editorials

FTX implications should not be ignored

There is a frequent refrain from many Bahamians on social media who opine “The Bahamas is not a real place” when something that appears nonsensical, bizarre, illogical or easily preventable occurs.

The connotation is that if The Bahamas were a real place, with real laws, lawmakers and institutions, abnormal things would not happen.

The fact of the matter is that The Bahamas is a very real place governed by the rule of law with an economy that works for the vast majority of its citizens.

We are not some fantasy land where anyone can do anything they like without consequence.

Though the refrain may appear kitschy and veracious, it is born of a sense of apathy and a disconnectedness that our national leaders have perhaps contributed to over the years.

The latest major controversy with FTX Digital Markets Limited, for example, seems fantastical but carries real reputational risk for The Bahamas.

As others have opined, the digital asset industry in The Bahamas has by no means been dealt a fatal blow by what has occurred with FTX, but The Bahamas must do the work necessary to ensure the fallout is minimized.

The government’s silence on the matter is not helping.

Of course, we expect a well-thought-out, carefully crafted response by the current administration given the magnitude of what has occurred.

But the clock is ticking as pundits who do not know any better seek to fill airtime on international news networks, explaining how they think things work in The Bahamas, with no international news anchor being sufficiently knowledgeable to refute their claims.

More than once, lack of oversight in the United States (US), the world’s largest economy, has triggered the crippling of world financial markets.

Enron and the 2008 global financial crisis spurred by malfeasance by some of the most well-regarded issuers and ratings agencies on the planet come quickly to mind.

We note that Alameda Research, former FTX CEO Sam Bankman-Fried’s US hedge fund, which is also at the heart of this collapse, was not subject to regulatory oversight by the US Securities Exchange Commission.

The US, too, must answer for what it could have done better to prevent this calamity.

However, unlike the US, we do not print the world’s reserve currency and cannot escape the impact of a challenged global financial environment by bailing ourselves out.

While we acknowledge there is inherent risk in every financial instrument, our regulatory agencies exist to mitigate those risks, not just to learn from what they did not see coming.

The police exist to prevent and detect crime, but those with criminal intent will test the most stringent of law enforcement regimes.

Ultimately, the blame for what has occurred lies with Bankman-Fried.

He will hopefully be held accountable for what has occurred.

But we were front and center when he showered The Bahamas with very real money; we cannot skulk away and hide now that he has showered us in shame.

The Securities Commission of The Bahamas has done well in communicating over the past few days, and we believe that the story of what happened on its watch will eventually be told.

However, we are eager to hear what our prime minister and minister of finance and our attorney general have to say about this matter.

Bankman-Fried hypnotized the world will his meteoric rise, now the world watches The Bahamas as his star comes crashing down.

It should see a strong, concerned, resilient and knowledgeable front as we move forward as a financial services jurisdiction.

The Digital Services and Registered Exchanges Act, 2020 and its 2022 amendments were uniformly supported by both political parties.

We should remind the Progressive Liberal Party and the Free National Movement that our regulatory agencies operate outside the political party framework.

For anyone to sow seeds of doubt in them for fleeting political gain or protection is ill-advised.

We do not subscribe to the delusion that political parties will hold hands when a storm as severe as this one occurs in the country, but it is the country that stands to lose the most in this scenario, not any particular politician.

Though many of our citizens may not think The Bahamas is a real place, when things that do not seem real carry real-world repercussions, we do not have the luxury of claiming we operate on a plane of reality separate from anyone else.

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