Thu | Jul 18, 2019

Local investors to test bitcoin trading on the JSE

Published:Friday | April 5, 2019 | 12:17 AMSteven Jackson - Senior Business Reporter
Ian McNaughton, chairman of the Jamaica Stock Exchange and managing director of Barita Investments Limited.

J amaicans will, in a few weeks, be able to buy cryptocurrencies through their local brokers in the second trial of the Blockstation platform by the Jamaica Stock Exchange, JSE, which comes amid a 25 per cent rise in the value of Bitcoin since April.

“We expect to have actual clients on board in the next couple of weeks,” said Managing Director at Barita Investments Ian McNaughton, who is also the current chairman of the JSE.

Last Friday, Canadian company Blockstation and the JSE signed an agreement paving the way for the Jamaican exchange to become one of the few in the world to allow live trading of cryptocurrencies.

The platform was reportedly first tested in January of this year.

“In this our second phase, we are onboarding our international brokers and their local clients,” said Blockstation co-founder Jai Waterman, who is also the company’s chief technology officer. “This is the ultimate goal to allow trading. Maybe we will add additional processes for the compliance departments, but we are going to make sure everything runs pretty smooth,” he said.

There are many online platforms independent of stock exchanges that allow persons to trade cryptocurrencies. Jamaicans, however, have found it difficult to access those platforms as they tend to reject credit cards linked to Jamaica.

The Blockstation platform will eliminate that blockade through the JSE.

Bitcoin, which is the most popular cryptocurrency, hit the headlines in December 2017 when it surpassed US$17,000 for one bitcoin. Its value ebbed to US$2,000 in 2018 and started much of 2019 at US$4,000, before jumping this month to over US$5,000 in April.

For Jamaican crypto investors, the cost to do transactions will vary between brokers, but it’s understood that it is likely to hover around 0.3 per cent of the value of the transaction. Five brokerages are now involved in the trial, including Barita, which indicates that it will start signing up clients shortly. Another, Sagicor Investments Jamaica, also says it will also be inviting select clients to trade.

Apart from the buying and selling of coins, the Blockstation platform will allow local companies to list their assets in what is called a security token offering, which is a digital version of an initial public offering.

McNaughton said the details are still being worked out, but it would result in a tradeable stock with built-in regulations. That’s because it is built on blockchain ledger technology, which creates a chain of all previous buying and selling activity for public viewing, he said – sort of like an email message chain.

“You would have a good handle of all the transactions and know if any would violate any anti-money laundering laws, and the system would flag any trades attempted by those on terrorist watch lists,” said McNaughton. “It is a sound platform,” he said.

Just this week, JSE announced that it would upgrade its trading platform later this year to one provided by Nasdaq. The Blockstation platform for cryptocurrencies will operate separately from the SMARTS system being supplied by Nasdaq for equity trades.

The JSE has not disclosed the investments it is shelling out for these technologies.

“We are launching a separate, stand alone platform through this agreement with Blockstation,” JSE Managing Director Marlene Street Forrest affirmed on Wednesday.

Street Forrest adds that Blockstation has been a good partner over the past year, working closely with the JSE and brokers, and that the exchange anticipates the product will both entice more investors and listings to the market.

steven.jackson@gleanerjm.com