Bermuda Monetary Authority Introduce ‘May 2021 Guidance’ For Digital Asset Business

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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.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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