BERMUDA Law and Practice Contributed by: Steven Rees Davies, Kyle Masters, Charissa Ball and Alexandra Fox, Carey Olsen
10.10Regulation of Funds Any fund that is captured within the definition of “investment fund” in the IFA, including funds that deal in digital assets, will be subject to regu - lation under the IFA. However, pursuant to the Digital Asset Business Exemption Order 2023, an investment fund that conducts a digital asset business activity and has appointed an invest - ment manager that is licensed under the IBA or is authorised by “recognised regulator” (as defined in the IBA) will be exempt from licens - ing under the DABA as long as an annual notice is filed with the BMA. It should be noted that, even though the fund itself may be exempt, if the investment manager, custodian or administrator are based in Bermuda they may well be deemed to be conducting a digital asset business activity Please refer to 2.2 Regulatory Regime for the broad definition of “digital assets” in the DABA and the DAIA. Virtual currencies that meet the definition of “digital assets” are treated the same as other blockchain derived assets from a regu - latory perspective. 10.12Non-Fungible Tokens (NFTs) For the purposes of Bermuda law, NFTs would constitute digital assets (see 2.2 Regulatory Regime ) and a platform that facilitates the trad - ing of NFTs would be conducting the digital asset business of operating a digital asset exchange, which requires a DABA licence. and require a DABA licence. 10.11Virtual Currencies
to local consumers while enabling new digital banking services to be offered” . An entity intending to conduct open baking activities in or from within Bermuda would be required to adhere to the licensing requirements and provisions of the Banks Amendment Act as well as the provisions of the DABA where such business constitutes digital asset business activity. There is currently no express prohibi - tion on open banking activity under the Bermuda legal regime. 11.2 Concerns Raised by Open Banking To date, the concept of open banking has not been prevalent with banks operating from within Bermuda. With PIPA having come into effect on 1 January 2025 (see 2.11 Implications of Addi- tional, Non-Financial Services Regulations ), Bermuda banks may be deterred from pursuing open banking concepts in the near future owing to the increased scrutiny over the protection of personal information. However, it is anticipated that the consensual use of personal information in these optional and contractual relationships will prevail once the law has settled in and ade - quate protection has been implemented. A specific body of law setting out the elements of fraud as it relates to the DAB Regime in Ber - muda has not been developed. The general common-law position would apply should this be considered by Bermuda courts. From a regulatory perspective, the BMA focuses on safeguarding customer assets by seeking to prevent or minimise the potential for fraud and misappropriation. There are multiple pieces of 12. Fraud 12.1 Elements of Fraud
11. Open Banking 11.1 Regulation of Open Banking
The Bermuda government has indicated its sup - port to the BMA “in advancing open banking standards in Bermuda to provide better services
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