Bermuda -- Stablecoin Regulations Regulatory Overview

Bermuda regulates stablecoins primarily under the Digital Asset Business Act 2018 (DABA), overseen by the Bermuda Monetary Authority (BMA), with stablecoin issuance classified as a licensable digital asset business activity rather than e-money, payment tokens, or securities.[1][2][3][4][6] This framework supports stablecoin issuers through a tiered licensing system (Class T for testing, Class M for sandbox, Class F for full operations) proportionate to business scale and complexity.[2][6]

Classification

Stablecoins are treated as a category of digital assets under DABA, not explicitly as e-money or payment tokens, though related payment activities may overlap with the proposed Payment Services Act (PSA).[3][4][6][7] Tokenised securities or funds involving stablecoins fall under the Investment Funds Act 2006, but standard stablecoin issuance is DABA-licensed.[3] Single-currency pegged stablecoins (SCPS) receive specific BMA guidance issued in November 2024.[4][6]

Issuer Licensing

Issuers must obtain a DABA licence from the BMA for activities like issuance, redemption, and related services; exemptions apply for DABA licensees under the upcoming PSA.[1][2][3][4][6][7] The BMA assesses compliance proportionately via the Digital Asset Business Code of Practice, covering governance, risk management, and controls.[6] Stablecoin issuers can opt for DABA or PSA licensing.[7]

Reserve Requirements

SCPS issuers must maintain full 1:1 reserve backing in high-quality liquid assets (e.g., US dollars for USD-pegged coins), with requirements for liquidity, segregation in separate accounts, and global holding flexibility (no EU geographic restriction).[1][2][3][6] Independent monthly attestation reports are mandatory, with case-by-case review for non-USD pegs.[3][6] Limited purpose insurers may use recognised stablecoins for premiums, claims, and capital.[3]

Redemption Rights

Holders have redemption rights at par value, supported by operational resilience standards and full backing to ensure stability.[3][6] The November 2024 SCPS Guidance specifies prudent issuance standards, including redemption mechanisms.[4][6]

Algorithmic Stablecoin Rules

No specific rules for algorithmic stablecoins are detailed in available sources; regulation focuses on asset-backed SCPS, with broader DABA applying to digital asset issuance generally.[1][3][4][6]

CBDC Interaction

Bermuda plans a Bermuda dollar-backed stablecoin as a blockchain-based stimulus token for retail use, developed by a DABA-regulated entity, but no direct CBDC references or interactions are specified.[6] The framework supports stablecoin innovation alongside potential CBDC-like tokens.[5][6]

Key Legislation and References

• Digital Asset Business Act 2018 (DABA): Core framework for stablecoin issuance and services[1][2][3][4][6]
• Digital Asset Business Single Currency Pegged Stablecoin (SCPS) Guidance (Nov 2024): Prudential standards for reserves, attestations, resilience[4][6]
• Proposed Payment Services Act (PSA): Regulates payments/digital wallets, with DABA exemptions and stablecoin options[3][7]
• Investment Funds Act 2006: For tokenised funds involving stablecoins[3] No official BMA URLs provided in sources; refer to BMA website for primary texts. Recent developments include the 2025 Bermuda Stablecoin Association for industry standards.[5]