BERMUDA Law and Practice Contributed by: Bourn Collier and Sharon A. Beesley, BeesMont Law Limited
with an Innovation Hub for earlier stage business concepts, with sandbox licensees being classed as either Innovative Insurer (Class IGB) or Innovative Intermediary (IMP) in accordance with the Insur- ance Act 1978. A number of the current cohort of companies in the Insurance Regulatory Sandbox deploy blockchain/ decentralised ledgers into their projects – such as offering insurance policies which are denominated in cryptocurrency and insurance markets which are administered by smart contracts. Thus those firms in the Insurance Regulatory Sandbox contribute to the relatively large number of innovative firms develop- ing new business models incorporating blockchain in Bermuda. • Payment Services Sandbox (prospective) – in 2025 the BMA began work on a modern licensing regime for payments, with a consultation on a proposed Payment Services Act (PSA), to replace the Money Service Business Act 2016. The PSA, which will entail a unified, risk-based licensing framework for payment services firms, and will sit alongside DABA such that DABA licensees issuing stable- coins for which they are already licensed will not require an additional PSA licence. Within the PSA, Class T (Testing) and Class M (Modi- fied) licences will operate as a regulatory sandbox for early-stage businesses piloting a minimum viable product against defined success criteria, a limited customer base and proportionate regulatory require- ments. For digital asset businesses, the PSA sandbox is expected to be relevant in three ways: • as a pathway to test stablecoin-denominated pay- ment products and B2B2C payment infrastructure straddling the DABA and PSA perimeters before committing to a licensing route; • as a structured environment (alongside a proposed AI Payments Hub) in which DABA licensees can extend into adjacent programmable or AI-driven payment use cases; and • as a feeder into the proposed Class F–R (Recip- rocal) licence, which is designed to be compat-
ible with emerging stablecoin reciprocity models – positioning Bermuda as an attractive launch jurisdiction for digital asset firms with cross-border payment ambitions. 1.1.3 Regulation of Blockchain Technology As mentioned, the focus of the DABA regulatory regime is on the licensing of digital asset business activities and the regulation of licensed persons (via the minimum criteria for licensing set out below). The digital asset business activities are as follows. • Issuance – issuing, selling or redeeming virtual coins, tokens or any other form of digital asset. • Payment Services Provider – operating as a pay- ment service provider business utilising digital assets which includes the provision of services for the transfer of funds. • Digital Asset Exchange – operating as a digital asset exchange (centralised or decentralised elec- tronic marketplace used for digital asset issuances, distributions, conversions and trades, including pri- mary and secondary distributions, with or without payment; provided that digital asset conversions and trades may also be entered into by the elec- tronic marketplace as principal or agent). • Trust services – carrying on digital asset trust services (acting as a fiduciary, agent, or trustee on behalf of another person for the purpose of admin- istration and management of a digital asset). • Custody – providing custodial wallet services (stor- ing or maintaining digital assets or a virtual wallet on behalf of a client). • Digital Asset Derivatives Exchange – operating as a digital asset derivative exchange provider (a centralised or decentralised marketplace used for digital asset derivatives issuances, distributions and trades with or without payment; provided that digital asset derivatives trades may also be entered into by the marketplace as principal or agent). • Digital Asset Services Vendor – operating as a digital asset services vendor (includes a person that under an agreement as part of its business can undertake a digital asset transaction on behalf of another person, has power of attorney over another person’s digital asset, operates as a mar-
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