Saint Kitts and Nevis and Cryptocurrency
Saint Kitts and Nevis Cryptocurrency Laws
Regulation of Digital Currencies: Cryptocurrency, Bitcoins, Blockchain Technology
Although Saint Kitts and Nevis have not passed any particular legislation regarding cryptocurrency, the country is nevertheless participating in the ECCB pilot program. The program aims to study the utilization of cryptocurrency as a fiat currency. The Eastern Caribbean Central Bank (ECCB) is the fiscal authority for the Eastern Caribbean Currency Union (ECCU). There are eight Caribbean islands in the ECCU, including Anguilla; Antigua and Barbuda; the Commonwealth of Dominica; Grenada; Montserrat; Saint Kitts and Nevis; Saint Lucia; and Saint Vincent and the Grenadines. The official currency for the ECCU is the Eastern Caribbean dollar. If the program achieves its purpose, then residents of ECCU countries can use digital Eastern Caribbean dollars as well as physical Eastern Caribbean dollars.
On March 9, 2018, the ECCB signed a memorandum of understanding with a fin-tech company named Bitt, Inc. to use a distributed ledger technology with a blockchain platform to create a digital Eastern Caribbean Dollar (DXCD). There are several focus points of the program. First, the program focuses on “data management, compliance, and transaction monitoring system for Know Your Customer, Anti-Money Laundering, and Combating the Financing of Terrorism.” Second, the project focuses on the development of a secure, resilient, digital payment, and settlement platform that does not violate regional and global compliance requirements. Third, the program focuses on authorizing the issuance of the Eastern Caribbean Dollar in physical or digital form.
The program’s purpose is to provide a safe and secure digital financial system by utilizing the advantages of blockchain. Additionally, the program is designed to exemplify the “viability” and “functionality” of the ECCB’s ability to issue Digital Eastern Caribbean Dollars. The DXCD will be distributed by licensed financial institutions as well as non-bank institutions within the ECCU. The DXCD will facilitate transactions between merchants and consumers as well as peer-to-peer transactions. For example, a Saint Kitts resident will be able to send a DXCD to another person on another island securely from their smartphone without paying any transaction fees.
According to the CEO of Bitt, the pilot’s purpose is to utilize blockchain technology to “solve persistent financial problems” and enhance the “economic growth and the quality of life of ordinary people.” The Governor of the ECCB, Timothy N.J. Antoine, proclaimed that the DXCD is the world’s first digital currency issued by a central bank and thereby the first digital currency that classifies as legal tender. In other words, the program permits Saint Lucia residents to use a governmental-sponsored digital currency as a medium of exchange. Saint Kitts residents now have the option to use cash, debit cards, credit cards, and digital currency to pay for goods and services. Unlike debit and credit card users, cryptocurrency users will not be burdened with additional transaction fees. The agreement aims to “reduce cash usage within the ECCU by 50%, promote greater financial sector stability, and expedite the growth and development of our member countries.”
Although Saint Kitts is participating in the ECCB pilot program, the government does not permit the use of Bitcoin as a means of payment for their Citizenship-by-Investment program. In 1984, the Saint Kitts and Nevis legislature passed the Citizenship Act, to allow the granting of citizenship to nonresidents on the condition that they contribute to the county’s economic development.
The program encourages non-residents to invest in the country in exchange for citizenship for themselves and their families. To become a citizen, an applicant must donate a non-refundable contribution of $150,000 to the Sustainable Growth Fund (SGF). The purpose of the SGF is to facilitate economic development and improve every sector of Saint Kitts and Nevis’s economy. Instead of investing in the SGF, applicants may also be granted citizenship if they invest $200,000 in approved real estate investments or contribute $400,000 directly to the government of Saint Kitts and Nevis. However, the government of Saint Kitts and Nevis declared that nonresidents may not use Bitcoin as a medium of exchange for their investments in the Citizenship-by-Investment program.
P.S. Insights on Cryptocurrency Legal Issues
Most jurisdictions and authorities have yet to enact laws governing cryptocurrencies, meaning that, for most countries, the legality of crypto mining remains unclear.
Under the Financial Crimes Enforcement Network (FinCEN), crypto miners are considered money transmitters, so they may be subject to the laws that govern that activity. In Israel, for instance, crypto mining is treated as a business and is subject to corporate income tax. In India and elsewhere, regulatory uncertainty persists, although Canada and the United States are relatively friendly to crypto mining.
However, apart from jurisdictions that have specifically banned cryptocurrency-related activities, very few countries prohibit crypto mining.
Our Freeman Law Cryptocurrency Law Resource page provides a summary of the legal status of cryptocurrency for each country across the globe with statutory or regulatory provisions governing cryptocurrency. The globe below provides links to country-by-country summaries:
Is cryptocurrency legal in Saint Kitts and Nevis?
Do you have questions about cryptocurrency, digital currencies, or blockchain technology?
Freeman Law can help with digital currencies, tax planning, and tax compliance. Contact us now to schedule a consultation, or call (214) 984-3410 to discuss your cryptocurrency and blockchain technology concerns.
[1] ECCB to Issue World’s First Blockchain-based Digital Currency | Eastern Caribbean Central Bank, Eccb-Centralbank.org, (2019).
[2] St. Kitts Citizenship-by-Investment. (2011). Henley & Partners.
