Cryptocurrency exchange FTX’s collapse has hit the Bahamas’ hopes for development and diversification after the country bet big on crypto for its future, the WSJ’s Matt Grossman and Angel Au-Yeung report. FTX moved its headquarters from Hong Kong to the Bahamas over a year ago after the island nation promised light-touch regulations and sweeteners for making the move.
Bahamian authorities saw the move as central to their plan to diversify away from tourism and offshore banking, which generate around 85% of GDP.
On the surface, the campaign was successful, with other crypto firms such as rival exchange OKX also investing in the Bahamas. FTX’s collapse leaves a hole, though, as its liberal spending on leasing fleets of cars, staging events and catering dries up.
The exchange’s implosion also poses a major challenge for prime minister Philip Davis, who publicly championed crypto as a driver of recovery after Hurricane Dorian and Covid dented tourism revenue. “The Bahamas is getting a black eye at every turn on this,” one of the Bahamas’ largest newspapers, the Nassau Guardian, wrote in an editorial this week that criticized Mr. Davis’s embrace of FTX.