Why is the Jamaica Stock Exchange Interested in Digital Currencies?

March 3, 2021

In 2018, the Jamaican Stock Exchange (JSE) stated their interest in digital currencies, which is a little surprising considering how conservative monetary authorities have been about embracing the digital currency revolution. It is possible that the JSE wants to switch to cryptocurrency and digital asset trading on their local platform as a sign of being an innovator and front runner in the capital markets sweepstakes. This innovative step of the JSE will most likely bring the Jamaica exchange to the fore among online digital currency and token trading platforms.

How Did It Start?

In order to implement this plan, JSE announced in 2019 that it would work with Blockstation, a Canadian FinTech company, via a MoU signed with Blockstation. Accordingly, it is aimed at JSE clients who wish to exchange Blockchain tokens in a secure environment. Furthermore, the JSE Blockstation network has stated that it is safe and equipped for exchanges of Blockchain tokens and digital currency exchange.

In January 2019, the first 60 days of the trial process of cryptocurrency were completed. After this process, the Managing Director of JSE, Marlene Street Forest, stated that they are satisfied with this trial's results and are feeling optimistic about the next steps. 

What is Their Motivation?

This project's primary purpose is to provide the customers, trading, quoting, and execution, settlement services for digital assets and tokens. There are several main reasons why Jamaica is interested in digital currencies;

- To support SMEs who want to raise capital through STO (Security Token Offerings).

- To prove that digital assets and cryptocurrencies can be exchanged through trusted broker members

- To create a more convenient and accessible market space for retail investors who hereto were excluded from legitimately participating in the digital asset space

- Using the underlying blockchain technology to make it more cost-effective to list the stocks and other assets of SMEs

According to the press, this collaboration if successful would be one of the first international exchanges to provide an online digital commerce space. Proponents of the JSE listing of digital tokens have highlighted how it will help to reduce friction when conducting transactions on the JSE. With the digital network and management system that Blockstation can provide, this will create a reliable platform to exchange blockchain tokens for broker-dealers and investing customers.

Will it be successful?

Jamaica like all the countries in the world has grown and diversified its economy since it launched its primary stock exchange in Kingston in 1968. There is no ban in Jamaica for transactions related to cryptocurrencies. Besides, new regulations have been issued by the JSE, Financial Services Commission, and Bank of Jamaica (BOJ) to facilitate this new generation of digital commerce transactions. According to Kirk Brown, chief investor of Sagicor Investments, a member of JSE, it is imperative to invest in digital assets through traditional financial institutions. From this perspective, JSE's partnerships and projects for digital currencies should be the preferred vehicle for safe investments into digital assets.

Blockstation’s core competency is the provision of end-to-end solutions to international exchanges for the trading, clearing, and settlement of bitcoin and other digital currencies. Blockstation's platform, called Smart ECN (electronic communication network), helps exchanges by creating a central registry in various broker/dealer networks. Digital assets can be bought and sold securely, and users can see the comparison of digital assets with fiat currencies.

JSE has stated that it is comfortable with its decision to cooperate with Blockstation because this platform includes known compliance and security rules to ensure a fair market for all participants. On the other hand, this partnership is not Jamaica's first entry into the digital currency space.

In 2017, the Jamaica Information Service (JIS) published a report stating that the Bank of Jamaica wanted to raise cryptocurrency awareness. According to the information obtained from this report, Livingstone Morrison who served as the former Deputy Governor of the Bank of Jamaica, said that the bank had taken steps to explore digital currencies more and made inroads to enlighten the public on the benefits of digital currencies ahead of the JSE initiative.

So What's the Result?

Morrison emphasized that the Bank of Jamaica is aware of investments in virtual currency transactions and that such transactions provide solutions to economic problems. According to the report results, he said that the public should be careful when using virtual currencies due to the lack of risks and consumer protection laws.

Jamaica is aware that digital currencies are ever more popular,these days. While blockchain is not prohibited in the country, it has taken steps to support this use and raise awareness. As a result of these steps, digital currencies have found the required safe environment and have made significant improvements in a short time. If it continues in this way, the usage of the digital currencies will likely become more widespread in the country. Thanks to the partnerships JSE makes,we see this as the first steps towards creating a digitally safe shopping environment.

Send more than money.