Eastern Caribbean Central Bank Says to be Wary of the High Risk Associated With Crypto-Assets

BASSETERRE, St. Kitts – The Eastern Caribbean Central Bank (ECCB) says it is encouraging members of the public, especially in the sub-regional Organization of Eastern Caribbean States (OECS), to exercise due diligence and to be mindful of the high level of risk crypto-assets present.

BANkcenThe ECCB, which serves as a central bank for Antigua and Barbuda, Dominica, Grenada, St. Kitts-Nevis, St. Lucia, and St. Vincent and the Grenadines, said it is aware of the recent collapse of the Bahamas headquartered FTX, which was reported to be a significant player in the crypto space.

“Crypto-assets are inherently volatile and speculative. As such, consumers should be aware of the risk of the loss of their investment, fraud and cyber-attacks, especially in jurisdictions where the sector is unregulated,” the ECCB said.

The Securities Commission of The Bahamas (SCB) last Wednesday said it is working with other regulators on matters dealing with the collapse of the FTX,  which is registered in that CARICOM country as FTX Digital Markets Ltd, with the Phillip Davis government expressing confidence in the Commission’s ability to handle the situation.

FTX moved its headquarters from Hong Kong to The Bahamas last year and the police in Nassau have already announced an investigation into FTX that had been backed by elite investors like BlackRock and Sequoia Capital, rapidly becoming one of the biggest crypto exchanges in the world.

In addition to the SCB probe, the US Justice Department is also investigating FTX.

The ECCB said the collapse of FTX has not been the first significant fallout in the crypto space this year.

“In light of these unfortunate events, the ECCB encourages the public to exercise due diligence and to be mindful of the high level of risk crypto-assets present.”

Meanwhile, Blockchain researcher and scientist, Dr Daniel Joseph, speaking on the” ECCB Connects,” program, said a key feature of cryptocurrency is the decentralized financial system which allows an individual to move money across borders and without the restrictions of a financial regulator or institution.

He said while some advantages of cryptocurrencies include: free and quick movement of funds, and easy access to financial services, products and instruments, however, cryptocurrencies are quite volatile and involve high risks. Furthermore, the decentralized system on which the currency operates does not provide any recourse or layer of protection to the investor.

In addition to the popular Bitcoin, Joseph says other types of cryptocurrencies include: Ethereum, Tether, and Ripple; noting that each type affords various offerings depending on the customer’s requirement.

He advises that, prior to investing in these types of currencies, people should conduct thorough research and persons should not invest more than he or she is willing to lose as there is no protection or recourse for retrieving lost investments via the platform.