Blockchain & Crypto-Assets 2026 Comparisons

Through its longstanding and highly respected regulatory regime, Bermuda has established itself as a leading jurisdiction for digital assets and blockchain, with a broad-based ecosystem of licensed businesses and service providers across a range of activities.

Beginning in 2018 with the Digital Asset Business Act (DABA), which introduced a licensing regime for firms carrying out “digital asset business” (defined below), a market supporting framework has evolved alongside DABA to include – a licensing regime for carrying out “digital asset issuance” under the Digital Asset Issuance Act (DAIA), introduced in 2020, various sandbox programmes (discussed below), detailed prudential and regulatory guidance published by the Bermuda Monetary Authority (BMA), along with active engagement across the digital finance industry in Bermuda.

The BMA, which is Bermuda’s sole financial regulator, administers a principles-based regulatory framework comprising legislation, policies, guidance, codes of practice, and regular industry-wide consultations. It oversees all financial institutions in Bermuda and is a member of the Global Financial Innovation Network (GFIN), an innovative network of regulators, and cross-border testing framework.

At the time of writing there are over 50 digital asset firms which are licensed or operating in sandbox operations overseen by the BMA, which has specialist expert teams covering digital asset licensing, Cyber Risk and Anti-Money Laundering (AML) and compliance aspects.

Bermuda’s approach can be characterised as a comprehensive but unified taxonomy of digital assets. The DABA definition of “digital asset” captures payment and exchange tokens, security tokens and utility tokens, with certain carve-outs.

Activities carried out by DABA licensees include stablecoin issuance, operating digital asset exchanges and derivatives exchanges, providing custodial wallet service, liquidity services, operating settlement platforms, providing payment services, and securities and real-world asset tokenisation platforms. This is complemented by blockchain-enabled insurers and reinsurers operating under the Innovative Insurer General Business (IIGB) and Innovative Insurer Long-Term (IILT) classes, alongside a broader cohort of companies engaged in carbon and climate finance, AI and digital asset infrastructure, and tokenised investment fund structures.

At the World Economic Forum in Davos, the Premier of Bermuda announced in tandem with Circle and Coinbase – Bermuda’s strategic positioning as a “fully on-chain national economy”, a milestone reflecting the maturity of the DABA framework and the depth of the stablecoin payments ecosystem now operating in and from the jurisdiction. The vision contemplates the progressive migration of everyday economic activity onto public blockchain rails, with regulated stablecoins serving as the principal medium of exchange across merchant payments, government services, payroll and cross-border settlement, supported by the licensed digital asset infrastructure already established in Bermuda.

On 5–6 November 2025, the BMA announced the first deployment under its Embedded Supervision Initiative. Launched in February 2025, the Initiative tests the direct integration of regulatory oversight, compliance checks and reporting mechanisms into the technological foundation of digital asset platforms – typically within smart contracts, protocols or data layers – so that supervisory requirements are enforced in real time with limited human intervention.

The first pilot, conducted through the BMA’s Innovation Hub in collaboration with Chainlink Labs, Apex Group, Hacken and Bluprynt, has been described by the BMA as a first-of-its-kind regulator-grade real-time oversight architecture for stablecoin issuance. Operating on testnet, the pilot combines an issuer identity layer provided by Bluprynt, oracle and compliance infrastructure provided by Chainlink Labs, institutional asset servicing provided by Apex Group, and on-chain surveillance provided by Hacken, to render compliance conditions and assurance mechanisms in machine-readable form within blockchain infrastructure, enabling continuous supervisory visibility over reserves, mint authority and transaction integrity. The deployment reinforces Bermuda’s positioning as a jurisdiction in which institutional-grade digital asset infrastructure can be developed in direct collaboration with the Authority as regulator.

The BMA maintains an exploratory posture, overseeing industry consultations in respect of payment services, as well as artificial intelligence in the financial services sector, each of which may involve new pathways for digital asset firms (including a payment services sandbox discussed below). Many of the issues which arise in the coming 12 months may arise or be centred around the matters which the BMA is consulting on (discussed below).

DABA licensees can be authorised to carry out a wide range of activities involving digital assets (details of specific licensable activities below) and currently Bermuda’s digital asset firms which are licensed under DABA conduct a number of different business types including:

• stablecoin issuance;
• digital asset exchanges and derivatives exchanges;
• liquidity service providers;
• settlement platform operators;
• securities and real-world asset tokenisation;
• payment services;
• insurance underwriting and marketplace operation;
• investment funds;
• governance and operation of decentralised autonomous organisations (DAOs); and
• carbon data, climate finance and compliance solutions.

A number of activities are specified as exempt from the requirement to obtain a DABA licence (see below) and two activities which are not specified as exempt in legislation but which fall outside of DABA and have been conducted by Bermuda companies in Bermuda and outside of Bermuda are mining of cryptocurrency/digital assets and operating blockchain protocols (to the extent of operations which themselves do not involve DABA licensable activities such as providing custodial wallet services).

Many of Bermuda’s DABA licensees offer services to institutional customers but several large and well-known retail digital asset businesses are licensed in Bermuda and the BMA is able to accommodate oversight of such businesses (with applicable safeguards and operating procedures).

Many DABA licensees offer services across a number of publicly permissioned blockchains and some of the larger operators operate interoperability protocols to allow clients to switch between different blockchains.

Part of the DABA licensing process involves careful assessments of appropriate levels of activity for operations post licensing and the BMA takes an active approach in setting operating thresholds (such as net asset and liquidity limits) when granting DABA Licences.

In respect of DAIA, which provides for the BMA to authorise public offers (issuances) of digital assets by applicant Bermuda firms (or overseas firms) in or from within Bermuda to raise capital, there has been relatively little activity, including as DABA licensees can issue digital assets (if carried out by way of business).

Regarding intellectual property Bermuda’s intellectual property regime – under the Copyright and Designs Act 2004 and the Trade Marks Act 2023 – has not required amendment to accommodate blockchain activity, and there has not been any Bermuda litigation alleging infringement in respect of on-chain structures or data.

The BMA oversees a number of regulatory sandboxes with new sector-specific sandbox regimes under consideration. Sandboxes include the following.

• DABA Licence Sandbox – for DABA licensees, the Class T and Class M licenses are considered as a sandbox environment overseen by the BMA – through which businesses graduate to the full Class F licence and are subject to certain limits and supervision, as they develop their business model.
• Innovative Insurance Businesses Sandbox – in addition the BMA operates a sandbox for innovative businesses in the Insurance industry, along with an Innovation Hub for earlier stage business concepts, with sandbox licensees being classed as either Innovative Insurer (Class IGB) or Innovative Intermediary (IMP) in accordance with the Insurance Act 1978.

A number of the current cohort of companies in the Insurance Regulatory Sandbox deploy blockchain/decentralised ledgers into their projects – such as offering insurance policies which are denominated in cryptocurrency and insurance markets which are administered by smart contracts. Thus those firms in the Insurance Regulatory Sandbox contribute to the relatively large number of innovative firms developing new business models incorporating blockchain in Bermuda.

• Payment Services Sandbox (prospective) – in 2025 the BMA began work on a modern licensing regime for payments, with a consultation on a proposed Payment Services Act (PSA), to replace the Money Service Business Act 2016. The PSA, which will entail a unified, risk-based licensing framework for payment services firms, and will sit alongside DABA such that DABA licensees issuing stablecoins for which they are already licensed will not require an additional PSA licence.

Within the PSA, Class T (Testing) and Class M (Modified) licences will operate as a regulatory sandbox for early-stage businesses piloting a minimum viable product against defined success criteria, a limited customer base and proportionate regulatory requirements.

For digital asset businesses, the PSA sandbox is expected to be relevant in three ways:

• as a pathway to test stablecoin-denominated payment products and B2B2C payment infrastructure straddling the DABA and PSA perimeters before committing to a licensing route;
• as a structured environment (alongside a proposed AI Payments Hub) in which DABA licensees can extend into adjacent programmable or AI-driven payment use cases; and
• as a feeder into the proposed Class F–R (Reciprocal) licence, which is designed to be compatible with emerging stablecoin reciprocity models – positioning Bermuda as an attractive launch jurisdiction for digital asset firms with cross-border payment ambitions.

As mentioned, the focus of the DABA regulatory regime is on the licensing of digital asset business activities and the regulation of licensed persons (via the minimum criteria for licensing set out below).

The digital asset business activities are as follows.

• Issuance – issuing, selling or redeeming virtual coins, tokens or any other form of digital asset.
• Payment Services Provider – operating as a payment service provider business utilising digital assets which includes the provision of services for the transfer of funds.
• Digital Asset Exchange – operating as a digital asset exchange (centralised or decentralised electronic marketplace used for digital asset issuances, distributions, conversions and trades, including primary and secondary distributions, with or without payment; provided that digital asset conversions and trades may also be entered into by the electronic marketplace as principal or agent).
• Trust services – carrying on digital asset trust services (acting as a fiduciary, agent, or trustee on behalf of another person for the purpose of administration and management of a digital asset).
• Custody – providing custodial wallet services (storing or maintaining digital assets or a virtual wallet on behalf of a client).
• Digital Asset Derivatives Exchange – operating as a digital asset derivative exchange provider (a centralised or decentralised marketplace used for digital asset derivatives issuances, distributions and trades with or without payment; provided that digital asset derivatives trades may also be entered into by the marketplace as principal or agent).
• Digital Asset Services Vendor – operating as a digital asset services vendor (includes a person that under an agreement as part of its business can undertake a digital asset transaction on behalf of another person, has power of attorney over another person’s digital asset, operates as a market maker for digital assets or operates as a digital asset benchmark administrator), where:
1. a “market maker” includes any operator who is:
1. fulfilling digital asset trade orders initiated by, or in response to, clients’ requests for trades; or
2. hedging positions arising from quoting trade prices or fulfilling trade orders of digital assets; and
2. a “digital asset benchmark administrator” includes any person that has control over the provision of a digital asset benchmark including administering the arrangements for determining a benchmark, collecting, analysing or processing input data for the purpose of determining a benchmark, and determining a benchmark through the application of a formula or other method of calculation or by an assessment of input data provided for that purpose.
• Lending and Staking – operating as a digital asset lending or digital asset repurchase transactions service provider (a person facilitating transactions by which a counterparty transfers or lends digital assets to a borrower subject to a commitment that the borrower will return equivalent digital asset with or without interest or premium on a future date; or when requested to do so by the lender or transactions governed by an agreement by which a counterparty transfers digital assets to a counterparty subject to a commitment to repurchase them or substituted digital assets of the same description at a specified price with or without premium, on a future date specified, or to be specified from that counterparty either as principal or agent).

Persons who are exempt from requiring a DABA licence are as follows.

• Affinity or rewards programme – a person providing an affinity or rewards programme, where value is granted as part of such programme, which value cannot be taken from or exchanged with the person for legal tender, bank credit or any digital asset.
• In-game asset – a publisher issuing, either themselves or via another person on their behalf, a digital representation of value, which is used exclusively within an online game, game platform, or family of games sold by the same publisher or offered on the same game platform.
• Data storage/security services – a person providing data storage or security services for a digital asset business, but is not otherwise engaged in digital asset business activity on behalf of other persons.
• Group services – an undertaking providing any digital asset business activity solely for the purpose of its business operations or the business operations of any group undertaking.
• Investment Fund – where an investment fund has appointed an investment manager that is licensed under the Investment Business Act 2003; or authorised by a recognised regulator, as such term is defined under Section 2 of the Investment Business Act 2003 – although note the ancillary business exemption in respect of the investment manager discussed below.

Each of the above are referred to as “non-specified persons”.

• Government bodies – the BMA, the government of Bermuda and any entity owned by it as well as a public authority, each of which are “specified persons”.

Each exempt undertaking is required to notify the BMA of its intention to be exempt (and file an annual declaration of continuation of exemption each year).

For DAIA, a single digital asset issuance activity is regulated, which is defined as an offer to the public to acquire digital assets or to enter into an agreement to acquire digital assets at a future date. The following types of digital asset issuance are exempt from requiring BMA authorisation:

• offers which the board considers will result in the digital assets becoming available to not more than 150 persons;
• an offer to “qualified acquirers” (defined in DAIA including high-net-worth/income individuals, types of businesses with a minimum of total assets or shareholders who qualify); and
• an offer which the board considers will result only in persons acquiring being institutional investors (whose ordinary business involves the acquisition, disposal or holding of digital assets, whether as principal or agent).

A DAIA authorised undertaking is required to publish an issuance document prior to offering digital assets to the public. Circumstances which are exempt from the obligation to file an issuance document under DAIA are as follows.

• Existing Listing – digital assets are listed on an appointed stock exchange or on an accredited digital asset exchange.

• Existing application for Listing, issuance document not required – an application has been made for the digital assets to be so listed, and the rules of the appointed stock exchange or accredited digital asset exchange do not require the undertaking to publish and file an issuance document at such time or in such circumstances.
• Already regulated, issuance document not required – the undertaking is subject to the rules or regulations of a competent authority, and such rules or regulations do not require the undertaking to publish and file an issuance document at such time or in such circumstances, except where exemption from publication and filing of an issuance document is given by reason of the offer via the digital asset issuance being made only to persons who are resident outside the jurisdiction of the competent authority.
• Issuance Document already approved – appointed stock exchange, accredited digital asset business or any competent authority has received or otherwise accepted an issuance document or other document in connection with the offering via the digital asset issuance to the public.

There are substantial penalties under DABA and DAIA for anyone who fails to comply with any requirement or contravenes any prohibition imposed by or under the legislation, including potential fines of up to BMD10 million. In addition the BMA has a wide range of enforcement options available to deal with any failure to comply with prudential and AML/ATF (Anti-Money Laundering and Anti-Terrorist Financing – otherwise called Combating the Financing of Terrorism (CFT)) requirements.

In respect of the Insurance Regulatory Sandbox and Innovation Hub, see commentary about sandboxes below.

Privacy and Data Protection

On 1 January 2025, the Personal Information Protection Act 2016 (PIPA) came fully into force in Bermuda and all Bermuda organisations which use personal information (whether wholly or partly by automated means including as part of a structured filing system) are subject to this Act.

As in other jurisdictions, the introduction has meant that Bermuda-based organisations, including digital asset firms, have to assess their own operations and have established processes to ensure compliance. This can include:

• the adoption of policies to take into account the nature, scope, context and purposes of the use of personal information and the risk to individuals from such use;
• engaging with third parties to ensure their compliance with PIPA at all times;
• designation of a privacy officer who will have primary responsibility for communicating with the Privacy Commissioner;
• undertaking assessments to determine statutory conditions of use the organisation can rely on;
• preparing a privacy notice and having protocols for providing to individuals when personal information is collected;
• ensure personal information held is accurate, up to date, adequate, relevant, is used in a lawful and fair manner;
• implement safeguards to protect personal information against risks of unauthorised access, destruction, modification or disclosure; and
• assess the level of protection provided by an overseas third party prior to making a transfer of personal information.

Impacts on Bermuda’s digital asset firms from PIPA compliance programmes will depend on the type of personal information they are using (and manner of use) and how such programs interface with on-chain operations. For example, an on-chain insurance market (using significant personal information of insured) compared to a liquidity services provider who deals only with institutions (with little or no personal information involved).

To the extent they are intended to comprise binding contracts (and include the requisite elements of contracts under common law – including offer, acceptance, intention to create legal relations and consideration), smart contracts can and will be enforceable as contracts under common law in Bermuda.

In addition, the enforceability of smart contracts (including when they comprise a contract under common law) is strengthened by a statutory presumption of effectiveness. Under the Electronic Transactions Act 1999 (ETA), legal recognition is given to electronic records (which includes information inscribed on a tangible medium or any other medium and is retrievable in perceivable form) with a negative presumption that the form of electronic record and records which are referred to in such record “shall not be denied” legal effect, validity admissibility or enforceability solely the ground of the electronic form of such record.

The ETA contains a negative presumption in respect of legal proceedings also – such that the electronic form of record (or its status as the best evidence, being not in the original form) shall not be a sole basis nor shall being the best evidence be a basis either, to deny admissibility in evidence in any legal proceedings.

Ordinarily however Bermuda DABA licensees need to ensure they adopt best practice in the operation of smart contracts to accord with the technical standards set by the BMA for smart contracts, which include the adoption of secure development practices (in respect of standards, audits and testing environments) as well as benchmarking against specific vulnerability standards, security assessments and reviews of design and implementation risks (as set out in the Operational Cyber Risk Management Code of Practice, Cyber Code).

The BMA is evolving its oversight of smart contracts, including observations in a Consultation Paper about Asset Tokenisation published earlier in the year (and discussed below). This includes recognising smart contract architecture (along with oracles and tokenisation platforms) as raising unique prudential challenges and risks, for which the BMA proposes to update supervisory standards and rules.

Bermuda hosts a number of professional bodies representing interests across the financial services sector. Relevant to digital assets is NEXT, the Bermuda Digital Assets Industry Forum, which is an autonomous industry advocacy group for Bermuda-based digital asset companies licensed by the BMA providing a collective voice and opportunities for collaboration within Bermuda and globally.

Founded in May 2022, at the time of writing it consists of 13 companies licensed under the Digital Asset Business Act (DABA) and/or the Innovative Insurance (IIGB) category. As well as being a voice for the industry and representing Bermuda’s interests internationally, NEXT has been involved in consultations with the BMA on behalf of its membership.

In addition, the Bermuda Stablecoin Association (BSA) was formally launched in late 2025 by leading global digital asset firms operating in Bermuda, as a collaborative, industry-led forum to support the adoption and institutional standard-setting of stablecoins.

The BSA’s early working group tracks focussed on compliance, technical standards, policy engagement and public education. It also participated in a consultation by the US Treasury on the implementation of the GENIUS Act (and its impact for foreign stablecoin issuers).

The proposition that digital assets are property under Bermuda common law was first established by Hargun CJ in In the Matter of BlockFi International Ltd (in provisional liquidation for restructuring purposes) (Bermuda Supreme Court, No 383 of 2022, 9 June 2023, unreported), following the English authority AA v Persons Unknown (2019) EWHC 3556 (Comm), with the holding subsequently referred to and applied by Martin J in In the Matter of BlockFi International Limited (in Liquidation) and In the Matter of the B Trust (2025) SC (Bda) 110 Civ.

DABA licensees are required to maintain segregation of client assets and recent authority and in the case of In the Matter of Bittrex Global (Bermuda) Limited (in Liquidation) (2025) SC (Bda) 78 Civ (Martin J) (affirmed by the Court of Appeal in Bittrex Global Inc v Howie and others (2026) CA (Bda) 1 Civ, it was held that the purported attempt in the Terms and Conditions of now defunct exchange Bittrex to transfer legal title in customer-deposited tokens to the company in exchange for a contractual claim failed, with Martin J and Sir Julian Flaux JA affirming, that Sections 17 and 18 of DABA require segregation of client assets notwithstanding any contractual provision to the contrary, and that a licensed undertaking cannot contract out of the statute – the Court of Appeal drawing on In Re Ipagoo LLP (2022) EWCA Civ 302 and Lehman Brothers International (Europe) (in administration) v CRC Credit Fund Ltd (2012) UKSC 6.

Read together, BlockFi and Bittrex establish that customer digital assets held by a DABA licensee are insulated from the licensee’s insolvent estate either by contract (BlockFi) or by statute (Bittrex), with both routes converging on the same customer-protective outcome and giving Bermuda one of the more developed bodies of digital-asset insolvency case law in the offshore world.

Custody and Control Frameworks

Consistent with the importance of control in asserting title to digital assets, in guidance and rules published by the BMA (exercising powers pursuant to DABA) which DABA licensees are required to adhere to (in respect of custody of digital assets for clients), it is provided that DABA licensees must have “adequate accounting... other records… systems and controls” to accurately track ownership and quantity of client digital assets, and the beneficial ownership rights of clients to digital assets held by DABA licensees are referred to in rules, whilst the recently introduced Custody Rules (see below) refers to holders of digital assets having “respective beneficial ownership rights”.

In general, pursuant to the Digital Asset Business Custody Code of Practice (Custody Code) the BMA (and its Cyber Risk team) typically considers control of private keys (even by way of authorisation procedures for a multi-party computation (MPC) wallet) as essential for determining the status of control of any digital assets and determining ownership interest and finality of any transfer. The Custody Code includes technical standards applicable to those DABA Licensees who provide custodial wallet services to ensure effective management and control of private keys (and thereby, of the digital assets themselves).

The control-based approach has been further entrenched by the Digital Asset Business (Custody of Client Assets) Rules 2025 (Custody Rules), introduced in early 2025, which formalise control-based supervision of custodial wallet service providers and capture in scope DABA licensees that exercise effective control over client assets through their business model (see further in 1.2.5 Insolvency and 3.1 Licensing Requirements).

Use as Collateral

Certain of Bermuda’s DABA licensees have looked to use digital assets for collateral arrangements in a number of ways in recent years.

Most recently, several DABA licensees have been establishing facilities to issue yield-bearing stablecoins in Bermuda with the intention that those tokens will be used as collateral for derivatives trading – a particularly high growth sector.

Second, the use of digital assets as collateral for staking was permitted with the addition of a DABA activity (operating as a digital asset lending or digital asset repurchase transactions service provider), although volumes of staking activity peaked in 2022.

Finally, transactions have occurred in Bermuda in which digital assets have been granted as collateral security for regular corporate transactions (by Bermuda companies holding digital assets), including for loan transaction security.

Bermuda does not have a specific statutory legal regime for granting collateral security over digital assets although there have been transactions where security was effected and registered by Bermuda companies pursuant to the statutory regime of granting a charge over moveable assets pursuant to the Companies Act 1981 (which involved some issues of technical complexity regarding the control of private keys).

The BMA requires disclosure of all banking relationships DABA Licensees have and reviews these to assess for risk and reputability.

Subject to this DABA and DAIA Licensees are able to work with a large range of banking and payment institutions globally, however they must manage such relationships through vendor due diligence and other applicable policies as part of their licence conditions, now reinforced by the BMA’s Operational Resilience and Outsourcing Code 2025 which applies to critical third-party relationships including banking and payment service providers.

There are no restrictions on DABA and DAIA Licensees obtaining general banking and payment services in Bermuda. Although appetite amongst Bermuda’s operating four authorised banks for digital asset business varies, certain of them have increased their service offering and appetite for DABA and DAIA Licensees recently.

In practice, most DABA and DAIA Licensees maintain banking and payment relationships with institutions outside Bermuda, reflecting the global nature of digital asset business and correspondent banking patterns.

While the Bermuda Monetary Authority has been proactive in giving greater consideration to ESG and Sustainable Finance concerns across its areas of supervision and did expand the risk management framework in the Insurance Code of Conduct in 2022 (to incorporate considerations of material risks from ESG aspects in particular climate risks), which may impact firms which participate in the Insurance Regulatory Sandbox, there are currently no disclosure or reporting requirements applicable to firms which are licensed under DABA or authorised under DAIA.

There is no tax arising on the issuance, acquisition, purchase, subscription or sale of digital assets in Bermuda.

There are no taxes on income, profits, dividends or capital gains or other taxes in Bermuda other than a 15% corporate income tax (CIT) payable if a Bermuda company is part of a multinational group with annual revenue of EUR750 million (from 2025), for which double taxation and set-off rules shall apply.

Digital asset licensees which are structured as exempted companies can apply to the Minister of Finance for an undertaking that the company will be exempt from any future imposition of tax on profits, income or any capital gain or appreciation until 31 March 2035 (although this does not apply to CIT, if payable).

In addition, any conversion of the local currency (Bermuda dollars) via Bermudian banks will incur a 1% Foreign Currency Purchase Tax charge.

In the event that aspects of a transaction involving digital assets are concluded in a written agreement which is to be registered in Bermuda (such as a charge or security agreement), stamp duty will be chargeable at rates specified in legislation.

Pooling of Client Assets

In early 2025, a pooling regime for digital asset business was introduced with the Digital Asset Business (Custody of Client Assets) Rules 2025. The Rules apply to all DABA licensees providing custodial wallet services under Section 10(2)(d) of DABA. On the occurrence of a pooling event – being the default of the licensed undertaking, the coming into force of a BMA direction in respect of client assets, or the default of an intermediary holding client assets – client assets across all client accounts are pooled and made available to meet client claims pari passu, with a separate sub-pool mechanism applying where the pooling event is the default of an intermediary. The pooling and trust regime under the Rules operates in addition to the existing obligations on DABA licensees to segregate client assets under Sections 17 and 18 of DABA.

Wind-Down Plan

Wind-down plans have become a key pillar of Bermuda’s DABA regime. As set out in the BMA’s Guidance for Prospective Applicants, DABA licensees are required to submit wind-down plans for their operations as part of licensing. For Class T and Class M licensees, wind-down plans may be conceptual in nature, outlining the general approach to orderly cessation if testing or development goals are not achieved.

Class F plans are expected to be more detailed and operationally focused, addressing triggering events, the resources required (financial, human and technological), the operational sequence, timelines, costs, client asset protection, data retention, contractual obligations, and stakeholder communications.

Case Law Including Cross-Border Co-Operation

Bermuda now has substantive case law on the winding-up of digital asset businesses, following the liquidations of two Class F DABA licensees in In the Matter of Bittrex Global (Bermuda) Limited (in Liquidation) (2025) SC (Bda) 78 Civ (Martin J), affirmed in Bittrex Global Inc v Howie and others (2026) CA (Bda) 1 Civ, and In the Matter of BlockFi International Limited (in Liquidation) and In the Matter of the B Trust (2025) SC (Bda) 110 Civ (Martin J), as mentioned earlier.

The BlockFi liquidation also stands as the first reported Bermuda example of a successful cross-border resolution of a digital asset business, conducted as an ancillary proceeding to Chapter 11 proceedings in the US Bankruptcy Court for the District of New Jersey.

Together, the cases establish key principles in the insolvency of DABA licensees, including “custody” in Section 18 of DABA is to be construed broadly and purposively (in a control-based test), while any attempts to circumvent the statutory regime through contractual drafting will not succeed.

Insolvency Mechanisms

Bermuda is a long-established financial centre with a sophisticated body of insolvency law, and the mechanisms available on the insolvency of a DABA or DAIA licensee depend on the corporate form of the licensee.

DABA licensees are typically incorporated as Bermuda exempted companies limited by shares, in respect of which the winding-up provisions of the Companies Act 1981 apply, with proceedings supervised by the Supreme Court of Bermuda under the Companies (Winding-Up) Rules 1982; alternative forms (including Incorporated Segregated Accounts Companies under the ISAC Act 2019, Segregated Accounts Companies under the SAC Act 2000, and limited liability companies under the Limited Liability Company Act 2016) carry their own statutory insolvency overlays.

Bankruptcy Remoteness

To protect client assets against bankruptcy, the BMA recommends applicants implement, where appropriate, limited recourse structures such as Incorporated Segregated Accounts Companies (ISACs), Segregated Accounts Companies (SACs), Special Purpose Vehicles (SPVs), trust arrangements, or other structures that demonstrably insulate tokenholders’ interests from claims against the issuer or originator of the underlying assets.

See 1.1.5 Industry and Trade Bodies.

The BMA has broadly implemented Recommendation 9 of the FSB 2023 Recommendations*, which provides that a stablecoin’s stabilisation method must rest on a reserve of assets at least equal to outstanding tokens in circulation and that a stablecoin should not derive its value from algorithms.

The BMA’s Digital Asset Business Single Currency Pegged Stablecoins (SCPS) Guidance (November 2024) gives effect to this position through its definition of an SCPS as a digital asset pegged to a specified asset, or pool or basket of assets, in a single fiat currency (paragraph 2), and through the backing asset, segregation and liquidity requirements.

The cumulative effect is that the SCPS regime is built exclusively around a reserve-based stabilisation logic, and algorithmic designs – which rely on mint-and-burn mechanics or arbitrage incentives rather than high-quality liquid reserves – cannot satisfy these requirements.

Non-conforming models fall outside the SCPS perimeter and are relegated to case-by-case assessment under paragraph 10 of the Guidance.

See 6.2.3 Backing Assets for further details as to eligible backing assets.

*Financial Stability Board: High-level Recommendations for the Regulation, Supervision and Oversight of Global Stablecoin Arrangements (July 2023).

Similar to tokenised securities, activities involving stablecoins are licensable under DABA in Bermuda and Bermuda hosts a number of stablecoin issuers as DABA licensees. In 2024 the BMA published detailed guidance (SCPS Guidance) applicable to stablecoin issuances which maintain a stable value relative to a specified asset or a pool or basket of assets in a single fiat currency (Single Currency Pegged Stablecoins or SCPS). The SCPS Guidance introduced a comprehensive prudential regime for stablecoin issuers with requirements in respect of:

• quality and sufficiency of backing assets;
• disclosures including requirements for attestations and audits of backing assets;
• stress testing;
• bankruptcy remoteness of structures holding backing assets;
• interoperability;
• recovery and resolution planning; and
• liquidity and net asset requirements (own funds).

In the guidance, the BMA does not identify algorithmic stablecoins (as being applicable), however, note that the requirement for the issuer to have backing assets with market value equal to or higher than the value of issued stablecoin tokens in circulation would likely preclude algorithmic stablecoins from being in compliance with the SCPS Guidance.

The majority or all of Bermuda’s stablecoin issuances licensed under DABA have had fiat currency or US Treasuries as backing assets.

The Bermuda framework imposes detailed requirements on the backing of tokenised assets, particularly for stablecoin and tokenised investment structures. As noted, these requirements are consistent with the FSB High-Level Recommendations and the FSB’s broader work on the regulation of crypto-asset activities – and the IOSCO Recommendations on Decentralised Finance and Cryptoasset Markets. The BMA’s articulated “same risk, same regulatory outcome” principle aligns with the FSB’s “same activity, same risk, same regulation” approach.

The SCPS Guidance imposes the following requirements on SCPS issuers.

• Quantity – backing assets must have a market value equal to or greater than the value of SCPS in issuance.
• Quality – backing assets must be capable of being bought or sold in the market without significantly affecting their prices, must carry limited credit, counterparty and market risk, and must be sufficiently liquid to meet reasonably foreseeable redemptions. Short-term marketable securities representing claims on, or guaranteed by, sovereigns and central banks with high credit quality are treated as the benchmark.
• Permitted asset classes – permitted backing assets include short-dated government bonds, reverse repurchase agreements over-collateralised by government or central bank debt securities on an overnight basis (with non-affiliated counterparties), public money market funds investing in government debt securities, and short-term cash deposits in commercial banks – each subject to BMA-agreed limits, credit ratings and legal arrangements.
• Daily liquidity – a defined percentage of backing assets must be invested in assets capable of providing daily liquidity, meaning assets that can be liquidated or withdrawn on no more than one working day’s notice.
• Over-collateralisation – where backing assets carry interest rate risk (longer-term backing assets), the issuer must over-collateralise the claims of digital asset holders, with the level of over-collateralisation sufficient to cover potential declines in asset values during stress periods and volatile markets.
• Segregation – backing assets must be segregated from the issuer’s own assets, with no rehypothecation or use for the issuer’s own benefit or that of another client.
• Diversification – backing assets must be diversified by investment strategy and counterparty (including banking parties and brokers) to reduce firm-specific risk and any business disruption.
• Daily valuation – backing assets must be valued daily, with the amount held adjusted to at least equal the original currency amount to which the SCPS is pegged.
• Investment policy – issuers must maintain a documented investment policy, complemented by systems and controls ensuring adherence to it, with deviations from short-term government bonds requiring an explanation of how the increased risks are mitigated.
• Bankruptcy remoteness – backing assets must be placed in structures bankruptcy-remote from any group entities and from any party that issues, manages or is otherwise involved in the SCPS issuer’s operations. Other creditors of those parties, and any creditors of the custodian, must have no claims on the backing assets, and the value of the backing assets must not have any significant correlation with the creditworthiness of the issuer.
• Independent legal opinion – the BMA may require an independent legal opinion confirming that the relevant courts would recognise the underlying assets held in a bankruptcy-remote manner as those belonging to the stablecoin holders.
• Disclosure and verification – issuers must produce monthly attestations of backing assets and/or external audits, fully disclose investment policies and invested backing assets to clients and the BMA, and publish a white paper describing rights, obligations and risks. Issuers should also perform internal and external reconciliations on at least a daily basis, comparing internal records of backing assets and tokens in issuance against third-party records.
• Yield – yield generation on backing assets is permitted under the Bermuda framework SCPS Guidance contemplates investment of backing assets in yield-generating instruments including short-term marketable securities, government bonds, public money market funds and short-term cash deposits subject to BMA-agreed limits, and the Asset Tokenisation Consultation Paper (April 2026) has a consistent posture.

The April Asset Tokenisation Consultation Paper extends similar logic to tokenised investments more broadly: Primary Tokenisers (an entity that issues tokenised assets and is responsible for the initial tokenisation process), who must maintain reserve assets on a 1:1 basis with issued tokens, with reserve assets being the exact referenced underlying assets that the tokens purport to represent, and pooled structures must maintain aggregate reserves reflecting the aggregate value of the pool. A tiered verification framework applies – daily internal reconciliations, periodic independent external attestations, and comprehensive Proof of Reserve audits.

The SCPS Guidance applies a uniform standard to all issuers, and wind-down and recovery considerations are adequately addressed under the existing DABA licensing framework and exists for stablecoins which may be considered a systemic risk.