Bermuda -- Securities Classification Regulatory Overview

Bermuda does not use a Howey test equivalent for classifying cryptocurrency tokens as securities; instead, it regulates all digital assets—including security tokens, utility tokens, stablecoins, and NFTs—under a broad, unified definition without distinguishing between token types for licensing purposes.[2][4][5][6]

Legal Test and Classification of Tokens as Securities

Bermuda's Digital Asset Business Act 2018 (DABA) defines a "digital asset" broadly as anything in binary format with a right to use that represents value, specifically including:

• Items used as a medium of exchange, unit of account, or store of value (not legal tender).
• Representations of assets like debt or equity in the promoter.
• Representations of other assets or associated rights.
• Access to applications, services, or products via distributed ledger technology (excluding certain affinity/rewards programs).[2][4][5]

Tokenised securities (e.g., representations of real-world assets like debt, equity, or yield-bearing stablecoins backed by US Treasuries) fall under this definition and are regulated as digital assets, enabling DABA licensing for related activities.[2][3] There is no separate "security token" carve-out or Howey-like test; tokenized RWAs or equity/debt representations are treated as digital assets if they meet the binary/value criteria.[2][7] All tokens (security, utility, payment, NFTs, stablecoins) are captured equally.[2][3][4]

Registration/Exemption Requirements for Token Issuers

Issuers conducting digital asset business (e.g., issuing, selling, or redeeming tokens) must obtain a license from the Bermuda Monetary Authority (BMA) under DABA: Class F (full), Class M (modified/sandbox), or Class T (testing), with minimum net asset requirements for Class M/F.[3][4][5]

• If issuing securities via digital assets, prior BMA approval is required, plus additional policies compliant with BMA securities issuance rules.[3]
• Pure digital asset issuance to fund the issuer's own business/project falls under the Digital Asset Issuance Act (DAIA), separate from DABA's business licensing.[6]
• ICOs are restricted activities needing BMA approval; no physical presence required, but economic substance rules apply.[5]
• Exemptions are limited (e.g., non-exchangeable rewards); most token issuance to third parties requires licensing.[4][6]

Secondary Trading Rules

Secondary trading (e.g., via digital asset exchanges, custodial wallets, or derivatives) requires a DABA license for operators, covering activities like exchanges, payment services using digital assets, trust services, or vendor services.[3][4][5][6] Tokenised securities trading is licensable under DABA without separate securities rules.[2]

Enforcement Examples

Search results provide no specific enforcement cases; regulation emphasizes proactive licensing and compliance (e.g., cybersecurity, client disclosure, prudential standards rules).[5] BMA oversees via approvals and ongoing supervision.[3]

Key Legislation and Regulatory Guidance

• Digital Asset Business Act 2018 (DABA): Core licensing framework.
• Digital Asset Issuance Act (DAIA): Issuer-specific regime.
• Supporting rules: Digital Asset Business (Cybersecurity/Client Disclosure/Prudential Standards) Rules 2018. Primary guidance via BMA; no direct URLs in results, but overviews in sources like Charltons Quantum guide[3] and Carey Olsen briefing[6].