The Bermuda Monetary Authority (BMA) recognizes the importance of actively monitoring its laws and regulations to ensure harmony with the undertakings which it regulates. As such, the BMA issued guidance on 8 June 2021 relating to the Digital Asset Business (DAB) sector in Bermuda, and more specifically, (i) helpful FAQs on the Digital Asset Business Act 2018 (DABA), (ii) guidance on the head office requirements under DABA, and (iii) guidance on the expected product due diligence to be conducted under DABA (collectively, the Guidance). The BMA’s commitment to providing a comprehensive framework and working with industry to ensure Bermuda’s Fintech sector continues to thrive has been further solidified by their recent development of the May 2021 Guidance. Not only is this Guidance beneficial to existing licensed undertakings, by providing clarity on their ongoing requirements and any potential future changes to their DAB License, but it provides transparency on how the BMA will assess prospective applicants and the requirements of each Class of DAB License in a very clear and easy to understand format.
The May 2021 Guidance sets out the key factors that the BMA will take into account when evaluating compliance with the head office requirement under DABA. It is reassuring to know that the BMA will take into account the nature, scale, complexity and risk profile of a licensed undertaking in this regard when assessing whether a DAB complies with this requirement. Contained within the Guidance is information on how a licensed undertaking should evaluate product due diligence, whether there is a material change to, or introduction of a new product, or a modification to an existing product. It is clear that the BMA will take a prescriptive approach to evaluating the introduction of new products or material changes to products that have been previously vetted and approved.
The May 2021 Guidance provides valuable insight into how the BMA will tackle key components in the life cycle of a licensed undertaking in Bermuda. See below to access the BMA’s Digital Asset Business webpage and to view the recent Guidance.
Please reach out to a member of our Technology & Innovation team to discuss the Digital Asset Business Act 2018 and these most recent Guidance notes.