SSP Diaries | Confusion in the financial sector?

Many moons ago the greatest injustice occurred when the ‘banker’ ran off with the ‘pawdna’ money, creating much concern and threats among the members that had just been swindled out of their hard-earned money. Ponzi schemes and scammers arrived on the scene, but the focus remained the same, ridding you of your funds. The innocent public continuously falls prey to these unscrupulous agents bent on enriching themselves at ones’ expense.

Today the world has become inundated with the rise in virtual currencies and the fancy terminologies – bitcoin, cryptocurrency, digital currency, etc. – and their interchangeable use which does nothing but lend confusion to the landscape.

Yes, I am confused. I thought that governments had a responsibility to define the currency in use in each country and to, more specifically, put in place and strictly enforce the regulatory framework of such systems for the benefit of the conduct of financial institutions/transactions. How then can we be witnessing today the use of a monetary form, the likes of ‘bitcoins’ that is not subject to such a framework but is being allowed wide usage in society? In some countries, El Salvador, for example, bitcoins operate as the primary financial tool.

The incidence of this form of monetary use is increasing in some areas as rapidly as it’s collapsing in others. Futures Exchange, or FTX, owned and operated by Sam Bankman-Fried, collapsed late in 2022, the well-known crypto giant Genesis has filed for bankruptcy and the revered crypto queen, Dr Ruja Ignatova, who reportedly pulled off the biggest cryptocurrency con in history, so far, has disappeared, without trace, allegedly with billions of investors’ money.

The virtual money age has provided governments with challenges which are being ignored in many areas. An unregulated monetary framework provides a haven for illegal acts such as money laundering, acts of fraud and financial manipulations, the likes of which we have never before seen and some of which have begun to be manifested.

I am becoming more and more confused each day when I neither see nor hear of any of our governments in our fragile Caribbean economies taking steps to protect us from such occurrences.

Additionally, there is so little public education and exposure on this subject matter that one can’t help but wonder if ulterior motives abound. We are in a financial crisis as far as I can see with the rising incidence of fraud, theft, misappropriations occurring in the ‘legitimate financial’ sector.

The SSL debacle, NCB and Sagicor thefts of client’s funds, and others too numerous to mention, combine to ask serious questions of the validity of the Bank of Jamaica’s Financial Regulatory Framework and in particular the Financial Services Commission. These occurrences fuel distrust and strongly indicate that current enforcement of the regulatory framework is insufficient/ineffective and far from being adequate.

If the legitimate sector is in this state, how can we at the same time be encouraging and/or accepting financial schemes that ‘cannot’ be regulated? It also begs the question: are our traditional/formal banks involved in the provision of bitcoin and other cryptocurrency services? I am hoping they are not because this would suggest that a portion of their portfolio responsibilities would be regulated and another unregulated!

I think there needs to be a public education campaign undertaken by government to end the confusion surrounding cryptocurrencies and all the other digital currency formats that are operating in our society today. In this campaign, it must be made quite clear how they intend to protect the population if the intent is to continue present trends. They should also state why it is that the practice is being allowed to grow, given the evidence arising daily, that points to illegal activities, greed, etc., in an unregulated environment.

Whether it be “pawdna, ponzi or scammer” there can be no real comparison with the virtual currency non-regulated framework, which, in my opinion, must be one of the most dangerous introductions into legitimate society for decades.

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