🇧🇲Bermuda

Detailed overview

Bermuda: Digital Asset Business Licensing, Digital Asset Issuance, Stablecoins, and BMA Supervision

Bermuda has a dedicated digital asset business regime administered by the Bermuda Monetary Authority. It is not a single informal “crypto registration” regime. Under the Digital Asset Business Act 2018, a person must not carry on digital asset business in or from Bermuda unless licensed in one of the statutory licence classes, subject to any applicable exemption order. The Act covers both Bermuda-formed persons carrying on digital asset business activity and foreign-formed persons carrying on digital asset business activity in or from Bermuda.

“Digital asset business” includes issuing, selling or redeeming virtual coins, tokens or other digital assets; payment service provider business using digital assets, including transfer services; operating a digital asset exchange; digital asset trust services; custodial wallet services; digital asset derivative exchange services; digital asset services vendor activity; and digital asset lending or repurchase transaction services. The underlying “digital asset” definition is broad and includes digital representations of value used as a medium of exchange, unit of account or store of value, non-legal-tender instruments, debt/equity or asset-right representations, and DLT-based access tokens.

The BMA currently offers three Digital Asset Business licence classes: Class F for full digital asset business activity, Class M for a defined period, and Class T for pilot or beta testing. The BMA may determine a different licence class than the one requested where appropriate, having regard to client, potential client and public interests and the obligations it considers necessary for the proposed activity. A licence application must include a business plan, management arrangements, AML/ATF policies and procedures, other information the BMA reasonably requires, and the application fee. The BMA may grant or refuse an application only after reviewing the application and must be satisfied that the Schedule 1 minimum criteria are fulfilled.

A Bermuda DAB licensee is subject to prudential and local-presence requirements. Every licensed undertaking must appoint a BMA-approved senior representative, and the senior representative must maintain an office in Bermuda except where the BMA has approved the appointment for a Class T licensee. Every licensed undertaking other than a Class T licensee must maintain a head office in Bermuda, and the digital asset business must be directed and managed from Bermuda. The BMA assesses this by reference to where strategy, risk management and operational decision-making occur and the presence of relevant senior executives. Licensees must conduct business prudently, satisfy fit-and-proper requirements for controllers and officers, maintain minimum net assets of USD 100,000 for non-Class T licences and USD 10,000 for Class T licences unless the BMA directs otherwise, maintain adequate records and controls, and maintain insurance or BMA-agreed risk mitigation for non-Class T licences.

Custody and client-asset protection are core licensing issues. A licensed undertaking holding client assets must keep client-asset accounts separate from accounts for other business, maintain BMA-acceptable protection arrangements such as surety bond, trust account, indemnity insurance or other approved arrangements, and, where it has custody of digital assets for clients, maintain sufficient amounts of each type of digital asset to meet client obligations. Client digital assets held for clients are not property of the undertaking and are not subject to claims of its creditors. The Digital Asset Business (Custody of Client Assets) Rules 2025 apply to client assets held by licensed undertakings providing custodial wallet services and require segregation, prompt accounting, client-asset controls, annual review by a qualified person and record retention.

Certain persons or activities may be exempt under the Digital Asset Business Exemption Order 2023. Specified persons include the BMA, the Government of Bermuda and government-owned entities, and public authorities. Non-specified persons must notify the BMA of their intention to rely on the exemption and file an annual declaration by 31 March if they continue to qualify. Non-specified exemption categories include certain affinity or rewards programmes, online game tokens used exclusively in a game or game platform, data storage or security providers not otherwise engaged in digital asset business, group-only internal digital asset business activity, and investment funds that have appointed a licensed or recognised-regulator-authorised investment manager.

Public digital asset offerings require separate analysis under the Digital Asset Issuance Act 2020. A “digital asset issuance” is an offer to the public to acquire digital assets or to enter into an agreement to acquire digital assets in the future. A person must not conduct a digital asset issuance in or from Bermuda unless authorised by the BMA, unless an exemption applies. An offer is not treated as public where the board considers that it is not calculated to result in the digital assets becoming available to more than 150 persons, where the offer is to qualified acquirers, or where it is not calculated to result in availability to persons other than persons whose ordinary business involves acquiring, disposing of or holding digital assets; undertakings relying on those routes must file a digital asset placement declaration form before entering into transactions.

For authorised public digital asset issuances, the applicant must submit a business plan, issuance document, management-arrangement particulars and other required information. The issuer must publish and file an electronic issuance document, provide a communication facility for questions and messages during the offer, provide a three-business-day withdrawal right, include risk warnings, apply participant identification and verification measures, and maintain security, confidentiality and disclosure mechanisms.

Bermuda treats single-currency pegged stablecoin issuance as a digital asset business issue under the DAB framework rather than as a separate standalone statute in the sources reviewed. The BMA’s Single Currency Pegged Stablecoins guidance applies to BMA-licensed DABs carrying on business as SCPS issuers and states that SCPS are a category of digital assets aiming to maintain stable value relative to a specified asset or basket of assets in a single fiat currency. The BMA expects SCPS issuers to hold sufficient backing assets in quantity and quality, segregate client assets from own assets, avoid re-use or rehypothecation, value backing assets daily, produce monthly attestations or external audits, publish a white paper, disclose backing-asset composition and market value, and clearly disclose non-par redemption, redemption conditions, fees and timing.

Digital asset businesses are AML/ATF regulated financial institutions for Bermuda AML/ATF purposes. BMA’s Annex VIII sector-specific AML guidance states that persons carrying on digital asset business within the meaning of section 2(2) of the DAB Act are prescribed as AML/ATF regulated financial institutions, and the guidance must be considered and incorporated into a DAB’s AML compliance programme. The Proceeds of Crime AML/ATF Regulations apply to digital asset business transactions, require risk-sensitive AML systems, reporting, recordkeeping, training, compliance-officer and reporting-officer controls, and include transfer-of-funds requirements covering digital assets.

Regulator: Bermuda Monetary Authority. Core routes: DAB Class F, Class M or Class T licence for digital asset business; Digital Asset Issuance Act authorisation for public digital asset issuances; Exemption Order notification / declaration route for qualifying exempt persons; BMA supervisory rules and codes for custody, client disclosures, annual returns, cyber risk, governance, AML/ATF, and stablecoins; separate analysis under investment business, investment funds, banking, trust, money services, insurance, sanctions and company-law regimes where the token or business model has those features.

Question presented and assumptions

Question presented: What Bermuda legal/regulatory entry should be added to the Licentium jurisdiction hub for cryptoasset / digital-asset licensing and market-entry purposes?

Assumptions: The intended hub entry is for firms providing exchange, brokerage, custody, custodial wallet, transfer, payment, token issuance, token sale, stablecoin issuance, derivative exchange, digital asset trust services, digital asset lending / repurchase, market-making, administration or management of digital assets, tokenised fund, securities-like token, or related services in or from Bermuda. No specific facts are supplied about Bermuda incorporation, foreign entity operations in or from Bermuda, local head office, senior representative, client location, private-key control, custody architecture, token rights, stablecoin peg and backing assets, public or private issuance, investment fund status, securities investment business, trust structure, lending terms, derivatives exposure, or exemption eligibility.

Jurisdiction profile

Bermuda Laws Online provides access to Annual Laws and Consolidated Laws; its “About This Site” page states that Annual Laws contain legislation and statutory instruments from 1998 to present, with some earlier material from 1993, and that Consolidated Laws contain amended legislation text updated regularly, with the “Amended By” section normally identifying the latest amendment. The controlling legislation used for this session includes the Digital Asset Business Act 2018, the Digital Asset Business Exemption Order 2023, the Digital Asset Business (Custody of Client Assets) Rules 2025, the Proceeds of Crime AML/ATF Regulations 2008, and the Digital Asset Issuance Act 2020.

The BMA is the principal digital asset regulator. The BMA’s Digital Asset Business page states that Bermuda created a DAB regime with the Digital Asset Business Act 2018 and that the BMA currently offers Test, Modified and Full DAB licences; the same page lists the current BMA-hosted DAB legislation, Exemption Order, custody rules, annual return rules, client disclosure rules, cyber risk rules, policy documents, codes and AML materials.

Hierarchy used in this analysis: Acts and statutory instruments / rules are controlling law. BMA rules made under statutory authority are binding within that authority. BMA codes of practice are official administrative materials with statutory relevance: the DAB Code of Practice states that failure to adhere to the Code will be taken into account by the BMA in determining whether a licensed DAB is conducting business soundly and prudently. BMA AML guidance is official administrative material approved by the Minister responsible for Justice; the Annex VIII guidance states that courts or the BMA must consider whether relevant guidance was followed when determining breach of relevant AML/ATF provisions.

Case law was not relied on. Bermuda’s Government court judgments page states that once a matter is completed and a judgment is given, it is available online, and the page provides access to recent Court of Appeal and Supreme Court judgments; no digital-asset case law was necessary for the conclusions in this session. (Government of Bermuda)

Executive summary

• Bermuda has a dedicated DAB licensing regime. Subject to exemption, a person must not carry on digital asset business in or from Bermuda unless licensed as a Class F, Class M or Class T undertaking.
• Digital asset business includes issuing, selling or redeeming digital assets; payment services using digital assets; operating a digital asset exchange; digital asset trust services; custodial wallet services; digital asset derivative exchange services; digital asset services vendor activity; and digital asset lending / repurchase transaction services.
• Bermuda nexus is statutory: a Bermuda-formed person carrying on a section 2(2) digital asset activity, or a foreign-formed person carrying on that activity in or from Bermuda, is carrying on digital asset business in Bermuda.
• A DAB licence application must include a business plan, management arrangements, AML/ATF policies and procedures, BMA-requested information and documents, and an application fee; the BMA may grant or refuse the application and must be satisfied that Schedule 1 minimum criteria are fulfilled.
• DAB licensees must satisfy fit-and-proper, prudent-conduct, governance, net-asset, recordkeeping, insurance / risk-mitigation, senior-representative and, for non-Class T licensees, Bermuda head-office requirements.
• Client assets and custody are protected by statute and rules: a licensee holding client assets must keep separate accounts, maintain BMA-acceptable protection arrangements, hold sufficient digital assets to meet client obligations, and treat client digital assets as not belonging to the undertaking or its creditors.
• The 2025 custody rules require custodial wallet service providers to segregate client assets, account for them properly and promptly, implement client-asset controls, and obtain an annual qualified-person review.
• Exemptions exist but are specific. The 2023 Exemption Order exempts specified government / public authority persons and creates notification and annual declaration requirements for non-specified categories such as certain rewards programmes, online game tokens, data storage / security providers, group-only activity and certain investment funds.
• Public token offerings require separate Digital Asset Issuance Act analysis. A digital asset issuance is an offer to the public to acquire digital assets or future digital assets, and a person must not conduct such an issuance in or from Bermuda unless authorised, unless an exemption applies.
• Single-currency pegged stablecoin issuers are addressed through BMA SCPS guidance under the DAB regime; BMA expects sufficient high-quality backing assets, segregation, no re-use / rehypothecation, daily valuation, attestations / audits, white paper, ongoing disclosure and clear redemption-condition disclosure.
• DABs are AML/ATF regulated financial institutions and must incorporate sector-specific AML/ATF guidance and regulatory requirements, including risk-sensitive systems, customer due diligence, reporting, recordkeeping, training, compliance-officer / reporting-officer controls and transfer-of-funds information requirements covering digital assets.

Analysis by issue

Is Bermuda a dedicated crypto licensing jurisdiction?

Conclusion: Yes. Bermuda is a dedicated digital asset business licensing jurisdiction, but the correct description is DAB licence / authorisation analysis, not a generic “crypto licence.”

Rule: The DAB Act provides that, subject to section 11 exemptions, “a person shall not carry on digital asset business in or from within Bermuda” unless licensed in one of the classes specified in section 12(3). The BMA may license an undertaking for one or more listed DAB activities, including issuing / selling / redeeming digital assets, digital asset payment services, exchanges, trust services, custodial wallets, derivative exchanges, services vendor activity and lending / repurchase activity. The BMA’s own DAB page states that it currently offers Test, Modified and Full DAB licences for entities conducting activities under the DAB Act.

Application: A Bermuda entry should state that the jurisdiction has a BMA licensing regime for digital asset business. It should not imply that a Bermuda company can conduct exchange, custody, stablecoin, token issuance, lending, payment or trust activity without regulatory classification. The first step is to identify whether the activity falls within section 2(2), and the second step is to determine whether a Class F, Class M, Class T, exemption, Digital Asset Issuance Act authorisation or other regime is relevant.

Limitations / counterarguments: A business may fall outside DAB licensing if it qualifies for an exemption, performs only non-regulated technology or group-internal activity, conducts a non-public issuance route under the DAI Act, or is instead primarily regulated under another Bermuda financial-services law. These are fact-specific.

Territorial scope and activity perimeter

Conclusion: Bermuda’s DAB perimeter captures Bermuda-formed entities carrying on DAB activity and foreign-formed entities carrying on DAB activity in or from Bermuda.

Rule: Section 4 of the DAB Act states that a person carries on digital asset business in Bermuda if it is incorporated or formed in Bermuda and carries on any section 2(2) digital asset activity, or if it is incorporated or formed outside Bermuda and carries on any section 2(2) digital asset business activity in or from Bermuda. The Minister, acting on BMA advice, may also make orders specifying circumstances where a person is or is not regarded as carrying on DAB in Bermuda.

The “digital asset” definition includes digital representations of value used as a medium of exchange, unit of account or store of value and not legal tender; assets such as debt or equity in the promoter; rights associated with assets; and DLT-based access to an application, service or product. The DAB activity definition captures public-facing digital asset issuance / sale / redemption, payment transfer services, exchanges, trust services, custodial wallets, derivative exchanges, services vendors, market-maker-type powers and lending / repurchase services.

Application: A Bermuda-incorporated exchange, wallet, token issuer, foundation, stablecoin issuer, custodian, broker or services vendor should not assume that non-Bermuda customers remove DAB exposure. Conversely, a foreign entity with Bermuda operations, management, infrastructure, regulated-service delivery, issuer activity or contracting may need DAB analysis if it conducts activity in or from Bermuda. Token labels such as “utility,” “payment,” “governance” or “stablecoin” are not determinative because the statutory digital asset definition is broad.

Limitations / counterarguments: The statute does not provide a complete answer for every offshore protocol, decentralized front end, non-custodial wallet, validator, software developer or group treasury operation. The result depends on who contracts with users, who controls assets or private keys, where management and operations occur, what activity is provided to the general public, and whether an exemption order applies.

Licence classes, application requirements and minimum criteria

Conclusion: Bermuda licensing is substantive and prudential. A DAB applicant must choose or be assigned a licence class and satisfy BMA minimum criteria, governance, AML, local-presence and prudential expectations.

Rule: The DAB Act establishes Class F, Class M and Class T licences. A Class F licence permits any or all DAB activities; Class M permits any or all DAB activities for a defined period determined by BMA; Class T permits DAB activity for a defined period for pilot or beta testing. The BMA may determine a different class than applied for, considering client and public interests and obligations it views as necessary because of the nature of the proposed activity.

The application must include a business plan, management-arrangement particulars, AML/ATF policies and procedures, other information and documents BMA reasonably requires, and an application fee. BMA may grant or refuse after receiving required information and cannot grant unless Schedule 1 minimum criteria are satisfied. Schedule 1 requires fit-and-proper controllers and officers, prudent conduct, minimum net assets of USD 100,000 for non-Class T licensees or USD 10,000 for Class T unless BMA directs otherwise, adequate records and systems, insurance or BMA-agreed risk mitigation for non-Class T licensees, and appropriate governance including effective direction by at least two persons and non-executive oversight as BMA considers appropriate.

Application: A DAB licensing package should cover entity structure, controllers, officers, business plan, financials, governance, compliance, AML/ATF, risk management, cyber, custody, outsourcing, complaints, product due diligence, disclosures, internal controls, capital, insurance, head office, senior representative and regulatory reporting. A Class T licence may be suitable for pilot / beta testing, but it is not a full production licence and remains subject to minimum criteria and BMA oversight.

Limitations / counterarguments: BMA’s final licence class, conditions and limitations will depend on the proposed activity, client risk, custody, stablecoin backing, token rights, derivatives, lending, market-making, retail access, outsourcing and group structure.

Local presence: senior representative and head office

Conclusion: Bermuda DAB licensing entails local presence. Non-Class T licensees must maintain a head office in Bermuda and have the digital asset business directed and managed from Bermuda.

Rule: Every licensed undertaking must appoint a BMA-approved senior representative. The approved senior representative must maintain an office in Bermuda, except where approved for a Class T licensed undertaking. Every licensed undertaking other than a Class T licensee must maintain a head office in Bermuda, and the digital asset business must be directed and managed from Bermuda. In assessing that requirement, BMA considers where strategy, risk management and operational decision-making occur and whether relevant senior executives are present and involved in Bermuda.

Application: A Bermuda DAB applicant should plan for substance. For a Class F or Class M licence, a nominal registered office is not sufficient by itself. The applicant should document Bermuda-based senior representation, head-office arrangements, board and management decision-making, risk governance, local records, compliance access and BMA supervisory access.

Limitations / counterarguments: Class T treatment is more flexible in the cited statutory provisions, but Class T is a testing route. BMA can impose conditions based on the scale and risk of the pilot. Group structures with global operations require careful mapping of where decisions and regulated services actually occur.

Exemptions under the 2023 Exemption Order

Conclusion: Bermuda has specific exemption routes, but they are narrow and procedural. Non-specified persons generally must notify BMA and file annual declarations if they continue to qualify.

Rule: The DAB Act allows an exemption order to exempt specified persons or specified classes of persons from section 10, in respect of all, one or more, or specified circumstances of DAB activities, and an exemption may be subject to conditions. The Digital Asset Business Exemption Order 2023 exempts specified persons from the section 10 licensing prohibition, including the BMA, the Government of Bermuda and government-owned entities, and public authorities. It also requires non-specified persons to notify BMA of intention to be exempt and to file an annual declaration by 31 March if they continue to qualify.

The non-specified person categories include certain affinity or rewards programmes where value cannot be exchanged for legal tender, bank credit or digital assets; online game tokens used exclusively in an online game or game platform; data storage or security providers not otherwise engaged in DAB activity; undertakings providing DAB activity solely for their own business operations or group operations; and investment funds that have appointed an investment manager licensed under the Investment Business Act 2003 or authorised by a recognised regulator.

Application: A rewards programme, game-token publisher, pure data-storage/security provider, group treasury or investment fund structure may have an exemption path, but the conditions must be tested precisely. For example, a game token becomes materially more difficult if transferable outside the game ecosystem or exchangeable for digital assets. A group-only exemption is unsuitable where services are provided to third-party clients. An investment fund exemption does not necessarily remove fund, investment business, AML or custody questions.

Limitations / counterarguments: The Order does not create a broad “utility token” exemption. The exemption is procedural and conditional; BMA notification and annual declaration obligations may still apply.

Custody, custodial wallets and client assets

Conclusion: Custody and client-asset controls are central Bermuda licensing issues. A custodial wallet provider or exchange custody model should be prepared for statutory segregation, protection arrangements and 2025 custody-rule compliance.

Rule: The DAB Act defines custodial wallet provider services as storing or maintaining digital assets or a virtual wallet on behalf of a client. A licensed undertaking holding client assets must keep accounts for those assets separate from accounts for other business. It must maintain a surety bond, trust account, indemnity insurance or other BMA-approved arrangements for client protection. If it has custody of digital assets for clients, it must maintain enough of each digital asset type to meet obligations to clients. The Act states that client digital assets are held for the client, are not property of the undertaking, and are not subject to claims of the undertaking’s creditors.

The 2025 Custody of Client Assets Rules apply to client assets held by licensed undertakings providing custodial wallet services. They require client assets to be kept separate from own assets, accounted for properly and promptly, subject to client-asset controls, and annually reviewed by a qualified person. The annual report must include records identifying balances for each client, account details and agreements, third-party outsourcing, key individuals, and agreements relevant to client ownership over assets.

Application: Custodial exchanges, hosted wallets, omnibus wallets, MPC custody, trust-style custody, stablecoin reserve custody and settlement wallets need a formal client-asset model. Required evidence should include wallet labelling, fiat client accounts, qualified custodian arrangements, reconciliations, ownership terms, insolvency analysis, insurance / surety / trust documentation, key management, segregation controls, outsourced custodian due diligence and annual review arrangements.

Limitations / counterarguments: A non-custodial wallet or software provider may fall outside custodial wallet licensing, but only if it does not store, maintain, administer or control client digital assets or wallets. The custody result depends on private-key control, transaction approval, legal title, wallet architecture, ability to freeze / move assets and client contractual rights.

Public digital asset issuance

Conclusion: A public token offering in or from Bermuda is separately regulated under the Digital Asset Issuance Act 2020 and may require BMA authorisation even where DAB licensing is also relevant.

Rule: The Digital Asset Issuance Act defines a digital asset issuance as an offer to the public to acquire digital assets or to enter into an agreement to acquire digital assets in the future. An undertaking conducts a digital asset issuance in Bermuda where it is incorporated or formed in Bermuda and conducts the issuance in or from Bermuda, or is incorporated or formed outside Bermuda and conducts the issuance in or from Bermuda. Subject to exemptions, a person must not conduct a digital asset issuance in or from Bermuda unless authorised by BMA.

The Act treats an offer to the public as including an offer to any section of the public, but provides that an offer is not treated as public if the board considers it not calculated to result in assets becoming available to more than 150 persons, if made to qualified acquirers, or if not calculated to make assets available to persons other than those whose ordinary business involves acquiring, disposing of or holding digital assets. Persons relying on those non-public routes must file a digital asset placement declaration form before entering into transactions.

Application: A Bermuda token issuer, foundation, launchpad, stablecoin issuer, tokenised project or exchange facilitating primary sales must separately assess whether the Digital Asset Issuance Act applies. If the offering is public, authorisation and issuance-document controls apply. If relying on a non-public route, the board determination, investor eligibility, placement declaration and factual distribution controls become important.

Limitations / counterarguments: A private placement can become public in substance if distribution, resale, marketing, exchange listing or indirect availability exceeds the statutory route. The DAI Act analysis does not displace DAB licensing, investment fund, securities investment business, AML or sanctions analysis.

Issuance-document, cooling-off, risk-warning and investor-protection controls

Conclusion: Authorised public issuances require disclosure and investor-protection mechanics, not merely BMA filing.

Rule: A digital asset issuance authorisation application must include a business plan, a copy of the issuance document, management-arrangement particulars and BMA-required information. An authorised undertaking must publish an electronic issuance document and file a signed copy with BMA. During the offer, the promoter must provide an electronic communication facility for messages, questions and responses; a person applying under the issuance may withdraw the application within three business days. The risk warning must include substantial known or reasonably foreseeable project risks, rights or options if the project does not go forward, rights in relation to the digital assets, and warranty / guarantee disclaimers. The authorised undertaking must also apply appropriate identification and verification measures and maintain security, confidentiality and disclosure mechanisms.

Application: A Bermuda public token issuance package should include a full issuance document, risk warnings, investor Q&A / communication process, cooling-off mechanics, KYC / verification workflow, security controls, supplementary disclosure procedures and director sign-off. Token issuers should also plan for supplementary particulars if the issuance document becomes materially inaccurate.

Limitations / counterarguments: The precise content of the issuance document depends on the digital asset’s rights, use of proceeds, technology, custody, redemption rights, governance, project risk, promoter identity and whether the asset is also a security, fund interest, stablecoin or derivative.

Stablecoins and SCPS issuers

Conclusion: Bermuda does not need to be described as having a separate MiCA-style stablecoin licence in the official sources reviewed. The more precise position is that stablecoin issuers may be licensed as DABs, with BMA SCPS guidance setting prudential expectations for single-currency pegged stablecoin issuers.

Rule: The BMA SCPS guidance states that it clarifies standards expected when assessing whether persons licensed under the DAB Act and acting as SCPS issuers are conducting business prudently. The guidance defines SCPS as digital assets that aim to maintain stable value relative to a specified asset or pool / basket of assets in a single fiat currency. The BMA expects SCPS issuers to hold sufficient backing assets in quantity and quality, where market value equals or exceeds the value of SCPS in issuance and assets are liquid with limited credit, counterparty and market risk. SCPS issuers should segregate client assets, avoid re-use or rehypothecation, value backing assets daily and adjust them to at least the currency amount to which the SCPS is pegged. They should produce monthly attestations and/or external audits, publish a white paper, disclose backing assets and values, and clearly disclose non-par redemption, fees, processing time and minimum redemption conditions.

Application: A fiat-pegged stablecoin issuer should prepare a DAB licensing strategy, reserve policy, custody / segregation structure, valuation process, liquidity management, attestation / audit process, white paper, redemption policy, risk disclosures and stress-testing approach. A non-fiat, algorithmic, commodity-backed, yield-bearing or multi-currency stablecoin should not assume the SCPS guidance fully captures its treatment; BMA says SCPS are the focus of the guidance, and other stablecoins require case-by-case assessment.

Limitations / counterarguments: The guidance is official BMA guidance, not a standalone statute. Stablecoin structures may also trigger banking, trust, securities investment business, investment fund, money service business, sanctions or consumer-disclosure issues depending on redemption claims, reserve ownership, yield, investment management, payment functionality and distribution.

AML/ATF, sanctions, transfer-of-funds and Travel Rule-style obligations

Conclusion: Bermuda DABs must be treated as AML/ATF-regulated financial institutions and must implement an AML/ATF compliance programme integrated with digital asset transfer controls.

Rule: BMA Annex VIII states that persons carrying on DAB within the meaning of section 2(2) of the DAB Act are prescribed as AML/ATF regulated financial institutions and that the Annex VIII guidance should be incorporated into a DAB’s AML compliance programme. The same guidance states that it is approved by the Minister responsible for Justice and that courts or the BMA must consider whether a person followed relevant guidance when determining breach of relevant AML/ATF provisions.

The AML/ATF Regulations require relevant persons to maintain risk-sensitive policies and procedures approved by the governing body, covering CDD, ongoing monitoring, reporting, recordkeeping, internal control, product/service risk assessment, enhanced measures, and monitoring / management of AML/ATF compliance. A relevant person must identify, assess, understand, document and update ML/TF risks across customers, relationships, jurisdictions, services, delivery channels, products and transactions. It must maintain internal reporting procedures, a reporting officer, independent audit function, employee training / screening and a managerial-level compliance officer.

For transfer-of-funds rules, the Regulations define “transfer of funds” as an electronic transfer through a PSP with a view to making funds available to a payee, and expressly include transfer of digital assets. The payer’s PSP must ensure transfers are accompanied by complete payer and payee information, verify payer information before transfer, not allow the transfer if required information is unavailable, and keep records for five years. The payee’s PSP must detect missing or incomplete information, treat missing / incomplete payer information as a suspiciousness factor, and keep records of payer / payee information for five years; intermediary PSPs must keep payer / payee information with transfers and take risk-based measures for missing information.

Application: A Bermuda DAB should implement KYC, beneficial ownership, transaction monitoring, suspicious activity reporting, sanctions screening, Travel Rule-style data capture and transmission, counterparty PSP / VASP due diligence, unhosted-wallet risk controls, product risk assessment, board-approved AML policies, compliance and reporting officers, independent audit, employee training and recordkeeping. Custody, exchange, stablecoin and transfer providers should build these controls directly into wallet, settlement and onboarding systems.

Limitations / counterarguments: The transfer-of-funds regulations are framed through PSP concepts and include digital asset transfers. Exact implementation depends on whether the firm is payer PSP, payee PSP, intermediary PSP, exchange, custodian, stablecoin issuer, wallet provider, or other DAB, and on whether transfers are hosted-to-hosted, hosted-to-unhosted, internal ledger, batch, cross-border or self-transfer.