BERMUDA Law and Practice Contributed by: Steven Rees Davies, Kyle Masters, Charissa Ball and Alexandra Fox, Carey Olsen
12.3 Responsibility for Losses The Digital Asset Regimes do not specifically provide for liability of licensees for loss suf - fered by customers, other than in relation to the provision of custodial services and the require - ment to have appropriate insurance or a similar arrangement in place to protect customer inter - ests. However, under common law, there are also civil remedies available to customers in the event loss is suffered by customers as a result of a licensee’s failures (such as negligence or a breach of contract). In the event the licensee entity is responsible for losses suffered by customers and is unable to meet that obligation out of its assets, the Ber - muda insolvency regime applies to licensees under the Digital Asset Regimes and is available to customers. The BMA’s Enforcement Guide provides that one of the most important factors the BMA will consider when assessing any civil penalty for breaches is whether there has been any loss, or risk of loss, to customers. If customers have suffered loss as a result of a breach by the licen - see, then the licensee and potentially its direc - tors/officers should expect the BMA to take this into account when developing its enforcement action.
legislation, regulation and various codes of con - duct that govern consumer protection in Ber - muda. The DABA mandates the safeguarding of customer assets and sets out the provisions for establishing formal customer complaints poli - cies and procedures. The Digital Asset Business Custody Code of Practice supplements the pro - visions of the DABA and specifies the require - ments of segregating customer assets from those of the DABA licensee. 12.2 Areas of Regulatory Focus Among other matters, the BMA focuses on pro - tecting customers and stakeholders, maintaining market integrity, and fostering trust in Bermuda’s digital asset business sector. Although fraud is not the singular focus of the BMA’s regulatory regime, Bermuda’s Digital Asset Regimes have been curated to combat the risk of fraud. The BMA closely monitors of the activities of regu - lated business for potential fraud and other cor - rupt activities in all sectors (and, specifically, the digital asset sector), including: • investment fraud; • market manipulation; • money laundering and terrorist financing; • insider trading; • fraudulent exchanges and wallets; and • cybersecurity breaches.
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