BERMUDA Law and Practice Contributed by: Steven Rees Davies, Kyle Masters, Charissa Ball and Alexandra Fox, Carey Olsen
created under the DABA or the DAIA, if the busi - ness activity that they are conducting using the technology is itself a regulated activity. 9.2 Contractual Terms to Assure Performance and Accuracy Financial service providers in Bermuda will seek and expect contractual terms based on inter - national market practice. It is the financial ser - vice provider using the technology that will be expected to ensure the technology helps or per - mits the financial service provider to comply, and does not prohibit the financial service provider from complying, with the legal and regulatory obligations of the financial services provider. 10. Blockchain 10.1 Use of Blockchain in the Financial Services Industry Traditional financial service providers in Bermu - da have benefited from the country’s early adop - tion of sector-specific legislation and regulation through the inevitable and rapid education of the workforce around the use of blockchain technol - ogy. All industry sectors have been involved in the consideration of the potential implementa - tion of blockchain as a technological solution to existing infrastructure demands. What has been clearly evident is the traditional financial sector’s willingness to co-operate with new entrepreneurial businesses that are offering novel ways to conduct traditional business using innovative technology, including blockchain. As an example, NAYMS is a Bermuda digital insur - ance marketplace that uses blockchain tech - nology for the conduct of brokering insurance contracts and has secured some of the oldest names in the industry as participants. There are also numerous other projects involving both the
public sector and the private sector that have secured funding and gained traction in develop - ing blockchain solutions, often involving profes - sional service companies such as law firms to assist in building both the digital and regulatory infrastructure to ensure solutions are as legally sound as they are technically robust. Notably, with regard to the Bermuda government and blockchain, the government has indicated its intention to launch a blockchain-based stimu - lus token for use in Bermuda’s retail market. As mentioned in 1.1 Evolution of the Fintech Mar- ket , such token is intended to be a Bermuda dollar-backed stablecoin and employ technol - ogy developed by a DABA-regulated entity. 10.2 Local Regulators’ Approach to Blockchain Demonstrating its role as an active, engaged and responsive regulator, the BMA and the Bermuda government regularly consult with industry with a view to the continued improvement of the digital asset regulatory framework, including its effec - tive administration and enforcement. The BMA and industry stakeholders continually review and monitor this framework (including the DABA and the DAIA) to ensure that it continues to meet or exceed applicable international standards – for example, with regard to regulation, compliance, and transparency – and that it continues to be fit for purpose. 10.3 Classification of Blockchain Assets Please refer to 2.2 Regulatory Regime for details of how “digital assets” are defined and treated. The Digital Asset Regimes do not differentiate between the different types of digital assets that exist or can be created and they are agnostic when it comes to the underlying technology. The Digital Asset Regimes seek to regulate the busi - ness and service activities surrounding digital
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