Circle and Coinbase have partnered with the Government of Bermuda to help the island nation go “fully onchain” by providing the digital infrastructure needed to support a nationwide transition to blockchain-based finance.

The initiative was announced during the World Economic Forum annual meeting in Davos, Switzerland, and would be centred on equipping the Government of Bermuda, local banks, insurers, small and medium-sized businesses, and consumers with the proper tools.

As a part of the initiative, both firms plan to support digital finance education and onboard local residents and institutions to new payment systems using blockchain rails.

Bermuda’s economy to benefit

According to the announcement, the initiative is expected to support Bermuda’s “highly entrepreneurial economy” that houses thousands of local businesses. Being grouped with Caribbean and other island jurisdictions has historically driven up fees and limited access to onshore payment processors, further squeezing already thin merchant margins.

Using alternative payment systems such as Circle’s USDC would help enable “fast, low-cost, dollar-denominated payments,” the announcement noted.

Transitioning to an on-chain economy is expected to unlock other tangible benefits, such as reducing reliance on traditional intermediaries, enhancing access to global capital, and keeping more economic value circulating within the island.

“This initiative is about creating opportunity, lowering costs, and ensuring Bermudians benefit from the future of finance,” Hon. E. David Burt, JP, MP, Premier of Bermuda, was quoted as saying.

Government agencies are expected to begin piloting stablecoin-based payments, while financial institutions will be integrating tokenization tools, and residents will be participating in nationwide digital literacy programs.

An exact timeline for when these pilots will expand into full-scale implementation was not mentioned in the announcement. However, it added that some local businesses have already started accepting digital payments following a USDC airdrop event last year.

Bermuda’s pro-crypto approach

Bermuda first made its regulatory push by establishing the Digital Asset Business Act back in 2018, which has since attracted over 40 licensed virtual asset service providers who now operate from the island.

Circle was among the first global companies to receive a full Class F DABA license in July 2019. Last year, it announced plans to expand its tokenized money market operations in the country.

Meanwhile, Coinbase secured its Class F license in April 2023 to establish an international hub.