BERMUDA Law and Practice Contributed by: Bourn Collier and Sharon A. Beesley, BeesMont Law Limited
submitted to the BMA in the appropriate form and must state the class of digital asset business licence required. There are three classes of digital asset business licences which may be applied for as follows. • Class F (full) licence – under which a person shall be licensed to provide any or all of the digital asset business activities under the definition of digital asset business. This licence does not have an expi- ration date; however, it is subject to regular super- visory visits by the BMA’s FinTech supervisory unit, AML unit and Cyber Risk unit. • Class M (modified) licence – under which a per- son shall be licensed to provide any or all of the digital asset business activities under the defini- tion of digital asset business for a defined period determined by the BMA. The Class M licence is designed to allow entities to transition from testing a proof-of-concept under a T licence (or other test- ing environments) to become a Class F licensee. During the M licence period, the financial institution develops its compliance programme to ensure its effectiveness at scale. This licence typically has a duration of 12 months and is subject to certain restrictions imposed by the BMA and supervisory visits from the BMA. • Class T (test) licence – under which a person shall be licensed to provide any digital asset business activity under the definition of digital asset busi- ness, for a defined period determined by the BMA and for the purpose of carrying out pilot or beta testing in relation to such activity. This licence has an initial duration period of three to 12 months, with the potential for extension, and is subject to certain restrictions imposed by the BMA. For DAIA issuance, applicants can apply for an author- isation to conduct a digital asset issuance. Minimum Criteria for Licensing (Authorisation) The BMA will not grant a DABA licence unless it is satisfied that the minimum criteria set out in DABA are fulfilled with respect to the applicant. The minimum criteria for licensing include standards which require:
• controllers and officers to be fit and proper per- sons; • business to be conducted in a prudent manner; • business to be conducted with integrity and skill; • implementation of corporate governance policies which are appropriate given the nature, size, com- plexity and risk profile of the company; and • consolidated supervision can occur (if the appli- cant’s position within a group will not obstruct supervision). Any licence issued by the BMA may be subject to such limitations on the scope of the digital asset business activity or the manner of operating the digital asset business as the BMA may determine to be appropriate having regard to the nature and scale of the proposed business. Further, a licence may be revoked by the BMA if any of the minimum criteria is not (or has not been) fulfilled in respect of a licensed undertaking. Similar minimum criteria in respect of digital asset issuances pursuant to DAIA. Protection (and Separation) of Client or Acquirer Assets DABA licensees are required to keep client assets separately from other business assets, whilst author- ised DAIA firms are required to keep accounts con- taining assets of a digital asset acquirer separate (from any accounts kept in respect of any other business until the completion of the issuance (or as required by the BMA). DABA includes additional requirements for custody of client assets – DABA licensees must maintain a trust account, surety bond or indemnity insurance to pro- tect clients and maintain a sufficient amount of each type of digital asset in order to meet client obligations. In addition to the existing technical standards in the Custody Code applicable to those carrying out custody of digital assets (as custodial wallet service providers) the recently introduced Digital Asset Busi- ness (Custody of Client Assets) Rules 2025 (Custody Rules), which apply to custodial wallet service provid- ers shall require those providers to:
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