BERMUDA Law and Practice Contributed by: Bourn Collier and Sharon A. Beesley, BeesMont Law Limited
ture, enabling continuous supervisory visibility over reserves, mint authority and transaction integrity. The deployment reinforces Bermuda’s positioning as a jurisdiction in which institutional-grade digital asset infrastructure can be developed in direct collaboration with the Authority as regulator. The BMA maintains an exploratory posture, oversee- ing industry consultations in respect of payment ser- vices, as well as artificial intelligence in the financial services sector, each of which may involve new path- ways for digital asset firms (including a payment ser- vices sandbox discussed below). Many of the issues which arise in the coming 12 months may arise or be centred around the matters which the BMA is consult- ing on (discussed below). DABA licensees can be authorised to carry out a wide range of activities involving digital assets (details of specific licensable activities below) and currently Ber- muda’s digital asset firms which are licensed under DABA conduct a number of different business types including: • stablecoin issuance; • digital asset exchanges and derivatives exchanges; • liquidity service providers; • settlement platform operators; • securities and real-world asset tokenisation; • payment services; • insurance underwriting and marketplace operation; • investment funds; • governance and operation of decentralised autono- mous organisations (DAOs); and • carbon data, climate finance and compliance solu- tions. A number of activities are specified as exempt from the requirement to obtain a DABA licence (see below) and two activities which are not specified as exempt in legislation but which fall outside of DABA and have been conducted by Bermuda companies in Bermuda and outside of Bermuda are mining of cryptocurrency/ digital assets and operating blockchain protocols (to the extent of operations which themselves do not involve DABA licensable activities such as providing custodial wallet services).
Many of Bermuda’s DABA licensees offer services to institutional customers but several large and well- known retail digital asset businesses are licensed in Bermuda and the BMA is able to accommodate over- sight of such businesses (with applicable safeguards and operating procedures). Many DABA licensees offer services across a number of publicly permissioned blockchains and some of the larger operators operate interoperability protocols to allow clients to switch between different blockchains. Part of the DABA licensing process involves care- ful assessments of appropriate levels of activity for operations post licensing and the BMA takes an active approach in setting operating thresholds (such as net asset and liquidity limits) when granting DABA Licences. In respect of DAIA, which provides for the BMA to authorise public offers (issuances) of digital assets by applicant Bermuda firms (or overseas firms) in or from within Bermuda to raise capital, there has been rela- tively little activity, including as DABA licensees can issue digital assets (if carried out by way of business). Regarding intellectual property Bermuda’s intellectual property regime – under the Copyright and Designs Act 2004 and the Trade Marks Act 2023 – has not required amendment to accommodate blockchain activity, and there has not been any Bermuda litigation alleging infringement in respect of on-chain structures or data. 1.1.2 Regulatory Sandbox The BMA oversees a number of regulatory sandboxes with new sector-specific sandbox regimes under con- sideration. Sandboxes include the following. • DABA Licence Sandbox – for DABA licensees, the Class T and Class M licenses are considered as a sandbox environment overseen by the BMA – through which businesses graduate to the full Class F licence and are subject to certain limits and supervision, as they develop their business model. • Innovative Insurance Businesses Sandbox – in addition the BMA operates a sandbox for innova- tive businesses in the Insurance industry, along
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