In the second and final part of an interview with Stan Stalnaker, the founder of Bermudian-based Hub Culture speaks about the launch of the first digital asset exchange in Bermuda that islanders can sign up to, and a vision that could place the island “at the epicentre” of financial clearance for digital assets.

Hub Culture’s Ultra Exchange went live last month. It is operating in a limited capacity until Bermuda’s Digital Asset Business Act 2018 comes into force. At present it trades bitcoin, ether, litecoin and ripple. Those who wish to trade can only do so if they already possess those digital currencies, and they must also pass KYC, AML and other regulatory legal requirements.

Hub Culture has been domiciled in Bermuda since 2006. Among its functions is management of the world’s first digital currency, Ven, which it introduced in 2007. It is able to operate the Ultra Exchange in Bermuda as a limited exchange through pre-existing permissions.

When the Digital Asset Business Act 2018 comes into force and new licences are issued, the aim is for Ultra to accept and trade other digital assets, including fiat currencies such as dollars. The Digital Asset Business Act has been passed by Parliament and now awaits the assent of the Governor and a notice of the Minister of Finance.

Ultra is a three-stage project; a white paper is available from the website https://ultra.exchange/

The idea for Ultra emerged from the Hub Culture Innovation Campus and Beach Club, which was held over 12 weeks at Ariel Sands last summer. Mr Stalnaker said the exchange is currently at step one. He added: “It is designed to be a decentralised exchange that will trade hundreds of different assets. The first wave is this limited crypto-exchange.

This year’s Hub Culture pavilion event took place in the south of France, near Cannes. It was focused on artificial intelligence. Plans are in place for Hub Culture to stage events in Bermuda in October.

“We are doing something new called Hub Culture Bermuda Innovation Sprint,” said Mr Stalnaker.

“If you are building a website or a technology, you go through these sprints where you work really hard to push something to market.

“It is very much like the innovation campus, but it will be focused more loosely all around the island, specifically focused on Hamilton.”

He said it would be two weeks of activity centred on AI and blockchain, hopefully anchored around some crypto conferences.

Another project in train is Bermuda Standard, which is described as a collection of globally applicable standards, which includes “human, company and object identity based on HubID, digital asset market data, and a rules and records repository anyone can contribute to”.

Mr Stalnaker hopes it will feed into a future e-identity [electronic identity] ecosystem that has been spoken about by the Government.

“You can build a digital identity for yourself or your company. Data onboarded can be sent to BMA, etc. Government can have the option to use it and save time by having a single location for onboarding data.

“We do not expect it to be the only onboarding port. For our customers and clients who want to come to Bermuda, we are giving them really easy tools to be able to direct the data to the right people here. It is a great way to bring and help new businesses to figure out how to come and do business here.”

Mr Stalnaker also sees an opportunity for Bermuda to be front and centre in digital asset world through what he terms “Bermuda Standard Clearance”.

Because cryptocurrencies are traded 24 hours a day, there is no global market close, which creates a problem if you are making a transaction or deal through a regular bank. Mr Stalnaker said: “How do you set the price?”

He sees Bermuda Standard Clearance as the solution, where 12pm in Bermuda is the moment a global clearance price for that day can be recognised. He said Bermuda’s geographical position makes it a strong contender to be the place where such a clearance price is given at midday, as “it is almost the only hour of the day when everyone [around the world] is awake. In California it would be 8am, in New York 11am, in the UK 4pm, while in Hong Kong and Japan it would be around 11pm and midnight.

“It’s the one hour where you can have a clearance price and set your daily close for all these different currencies.”

He said there would be a clearance price as well as a live market price. A Bermuda Standard Clearance would put the island “at the epicentre for financial clearance for the industry”.