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A token representing Bitcoin virtual currency sits among cables and LED lighting inside a 'mining rig' computer in this arranged photograph in Budapest, Hungary, on Wednesday, January 31, 2018. Cryptocurrencies are not living up to their comparisons with gold as a store of value, tumbling last week Monday as an equities sell-off in Asia extended the biggest rout in global stocks in two years. (Photo: Akos Stiller/Bloomberg)

Cryptocurrency trading coming to the Jamaica Stock Exchange by summer

A token representing Bitcoin virtual currency sits among cables and LED lighting inside a 'mining rig' computer in this arranged photograph in Budapest, Hungary, on Wednesday, January 31, 2018. Cryptocurrencies are not living up to their comparisons with gold as a store of value, tumbling last week Monday as an equities sell-off in Asia extended the biggest rout in global stocks in two years. (Photo: Akos Stiller/Bloomberg)

The public will soon be able to trade cryptocurrencies on the Jamaica Stock Exchange (JSE). The disclosure was made by the manager of bond trading, equity and stockbroking at Victoria Mutual Wealth Management, Denise Marshall-Miller, on the latest episode of Taking Stock with Kalilah Reynolds.

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Marshall-Miller said VM Wealth and its partners are working to make that happen as early as this summer.

“I’m thinking this could be within the third quarter of this year the latest…. We are working with our regulators and we’re awaiting approval to start to offer this to our clients…. As soon as we receive this approval then we will commence,” she said.

Cryptocurrency is a decentralised form of digital money powered by blockchain technology. Among the most popular are Bitcoin, Ethereum and Dogecoin, but there are over 5,000 different cryptocurrencies in circulation.

Jamaica’s crypto connection

Jamaica has its own connection to Dogecoin. Back in 2014, over US$25 million was raised using Dogecoin to send the island’s bobsled team to the Winter Olympics. Both Dogecoin and Bitcoin are completely in the hands of the public.

: In this photo illustration, visual representations of digital cryptocurrencies Dogecoin and Bitcoin are arranged on January 29, 2021 in Katwijk, Netherlands.
(Photo: Yuriko Nakao/Getty Images)

Marshall-Miller said the process to buy cryptocurrency on the local stock market would involve a broker who would act as the middle man. The activity would be powered by Blockstation, an end-to-end digital asset trading platform. The JSE had signed an agreement with Blockstation in 2019. That master agreement enables live trading of digital assets and security tokens in a regulated and secured environment.

“A lot of work has been put in for the past three years and now we’re at the final stage,” said Marshall-Miller.

Bypassing the system

With some local financial insitutitions blocking Jamaicans from transferring funds into their cryptocurrency coin wallets online, a number of Jamaicans have been using their credit cards to beat the system and make purchases. However, they are often faced with higher fees and are exposed to other risks.

Marshall-Miller said VM Wealth’s solution will allow Jamaicans to feel safe handling those digital dollars.

(Photo: Facebook @Victoria Mutual)

“There’s the whole risk of your wallet being stolen, the hacking, etc. The system we’re looking to bring to Jamaica via the JSE is an ecosystem in the sense that the trading, the settlement and the storage [are] done seamlessly,” she said.

She added that companies looking to raise funds will also be able to come to the market in the form of a securitised token offering (STO), a replication of the traditional initial public offering (IPO). However, unlike IPOs, money for an STO can also be raised beyond Jamaica’s borders.

“I think that’s really revolutionary for the whole crypto market to bring this to the fore,” she said.

CEO of E.Chapman Group Toronto, Earl Chapman, who recruited Blockstation to present the platform to the JSE, said Jamaica stands to reap significant benefits with the creation of digital asset exchange.

Jamaica Stock Exchange on Harbour Street in Kingston, Jamaica (File photo)

“What we’ve built in Jamaica is the whole process of being able to come to a broker dealer, to being able to open an account like you would do for a normal transaction and then be able to buy and sell whatever we’ve decided to put out there,” he said.

Bitcoin’s sudden surge

This is not the first attempt to bring cryptocurrency trading to Jamaica. In 2016, the UK-based CARICOIN was among the first stakeholders hoping to launch a licensed Bitcoin exchange in the island. According to CEO of CARICOIN, Karsten Becker, the company was in talks with the Bank of Jamaica (BOJ); however, no licences were issued by the central bank, forcing the company to shift its focus elsewhere.

Becker, who also appeared on Taking Stock, said increased regulations across the world for the crypto market have given investors confidence and contributed to the spike in interest and its overall value in the past year.

He projected that the most popular cryptocurrency, Bitcoin, will likely be worth over a million US dollars in the next four to five years, with institutions like banks and hedge funds investing money into it. Bitcoin is now valued approximately US$57,000. Just a year ago it was worth US$8,000.  According to a report by Deutsche Bank, Bitcoin is now the world’s third-largest currency.   

“We’ve seen the market go from a couple million dollars five years ago to over $2 trillion now, so anybody who invested in crypto last year and the years before would have made a lot of money,” he said.

Ethereum and DeFi

Becker believes Ethereum will be the next cryptocurrency to follow Bitcoin in value. That, he said, has been powering the smart contract revolution and a whole new market of decentralised financing.

He said that while cryptocurrency doesn’t have the institutional money behind it, it’s also cutting out the middle man with its technology, and enabling individuals to trade money for a variety of financial services including peer-to-peer loans and insurance policies.

Based on his company’s data insights, Becker said another area to watch in the space is DeFi, short for ‘Decentralised Finance’, which is emerging due to their involvement in peer-to-peer loans.

He said as this new ecosystem grows and takes over from traditional systems, the value of the market will continue to set new records. At the same time, he’s cautioning individuals interested in the crypto market to evaluate their plans before tapping in.

“The value of crypto can increase or decrease with time. If you’re a day trader, there’s a lot of volatility so [it’s] probably not the best market to be in unless you’re very savvy, but if you’re looking at it as a long- term investment, then from personal experience I’d say it probably is the best place to put your money,” he said.