FTX collapse undermines Bahamas’ regulatory credibility and diversification strategy
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.