BERMUDA Law and Practice Contributed by: Steven Rees Davies, Kyle Masters, Charissa Ball and Alexandra Fox, Carey Olsen
1. Fintech Market 1.1 Evolution of the Fintech Market Since the introduction of the Digital Asset Busi - ness Act 2018 (DABA) and ancillary regulations related thereto (the “DAB Regime” ), Bermuda has become a recognised global leader in the regulation of the fintech sector. The Bermuda government forged one of the world’s first com - prehensive regulatory frameworks specifically designed to provide legal and regulatory cer - tainty to industry participants while ensuring that business in the fintech sector is conducted in accordance with recognised international stand - ards and best practice. Bermuda’s legal and regulatory fintech frame - work is founded on two key statutes. The DABA introduced the DAB Regime for businesses con - ducting “digital asset business” and the Digital Asset Issuance Act 2020 (DAIA) established a regime to regulate initial coin or token offer - ings (the “DAI Regime” ) (together with the DAB Regime, the “Digital Asset Regimes” ), referred to as “digital asset issuances” . The DABA introduced the world’s first statutory definition of “digital assets” (see 2.2 Regulatory Regime (DABA)), which encompassed all types of digital coins, tokens and assets, without differ - entiation. This provided a consistent and reliable interpretation of what amounted to conducting digital asset business as a regulated activity in and from Bermuda. Since the Digital Asset Regimes were intro - duced, the Bermuda Monetary Authority (BMA) – Bermuda’s sole financial services regulator – has continued to enhance and update applicable rules, regulations, codes of practice, statements of principles, and guidance to extend the scope of both Digital Asset Regimes.
Further, Bermuda has strived to grow a col - laborative business and regulatory culture that involves industry and government working together to create opportunities and commer - cial success, with a truly independent, actively engaged and globally recognised regulator maintaining the balance between the promo - tion of innovation and adherence to worldwide standards of regulation, compliance and good corporate governance. As a testament to this, in response to industry developments, in 2023 the list of regulated digi - tal asset business activities under the DABA was expanded to include a separate activity of oper - ating as a digital asset lending or digital asset repurchase transactions service provider. The first licence for this category was issued in 2024. In 2024, the BMA published guidance specific to single currency pegged stablecoins – one of the first regulators to do so following consultation with the industry and recognising the potential for stablecoins as a widely spread asset class. Also in 2024, the BMA initiated a consultation inviting the industry to comment on proposed changes and clarifications proposed to the DAB Regime to reflect developments in the rapidly evolving fintech market since the DABA’s intro - duction in 2018. This will be the first signifi - cant general amendment to the DABA since its enactment, evidencing the benefit and longev - ity resulting from the DAB Regime regulating all types of digital coins, tokens and assets from its inception. Bermuda has also been actively exploring how to legally recognise – and, if applicable, regu - late – decentralised financial services ( “DeFi” ). Both the BMA’s fintech team and the govern - ment’s DAO Working Group have been working on proposals for introducing digital governance
83
CHAMBERS.COM
Powered by FlippingBook