QuadrigaCX's Situation Could've Been Avoided if It Was Based in Bermuda, Premier Claims

The Premier of Bermuda, David Burt, has recently claimed that QuadrigaCX’s situation could have been avoided if the cryptocurrency exchange was based in the country, thanks to its regulations of cryptocurrency-related firms.

Speaking during Fortune’s Balancing the Ledger, Burt revealed he believes QuadrigaCX’s users wouldn’t have been locked out of roughly $145 million worth of cryptocurrency after the unexpected death of its founder and CEO Gerald Cotten. He stated:

If Quadriga was licensed under the Bermuda Monetary Authority, what has happened would not have been able to happen, because we have rules regarding the custody of master keys and making sure they’re not held by a particular individual.

As CryptoGlobe has extensively been covering, the embattled Canadian cryptocurrency exchange halted its services after Cotten unexpectedly passed away, as he was seemingly the only person with access to its cold storage wallets.

As a result, over 115,000 users lost their funds, as the situation is being looked into. One user in particular has lost his $400,000 life savings on the platform. Notably, court-appointed monitor Ernst & Young has found that some of the exchange’s cold storage wallets have been empty since April.

In Bermuda, thanks to its Digital Asset Business Act 2018, which encourage cryptocurrency-related businesses to move into the island nation, the case may have not occurred as the regulatory framework foresees the situation. Burt explained:

It basically states what you have to do with the master keys, how those things have to be handled, and making sure that they cannot be lost, or if they are lost, there’s a way for that recovery to happen.

The country has so far allowed 74 fintech firms to operate within it, and recently approved its first cryptocurrency exchange, a platform called Omega Dark. It’s currently looking to attract more businesses, but these have to pass a “very stringent test” that helps prevent situations like that of QuadrigaCX.

Per Burt, any “reputational damage from scams or otherwise can have an impact” on Bermuda’s traditional financial services sector. As such, the nation works to prevent “cross-contamination.”