Stablecoin issuer / redeemer in Bermuda
Issues a fiat-pegged stablecoin to the public, operates redemption, and holds reserves backing the float.
Stablecoin issuer is conditionally permitted in Bermuda with a local entity, subject to AML obligations and high licensing burden.
Verdict Details
- Permitted
- conditional
- Local entity required
- Yes
- Licensing burden
- High
- Last updated
- 2026-07-13
AML Obligations
- AML/ATF obligations under the Proceeds of Crime (AML/ATF Financing) Regulations 2008 apply to DABA-licensed entities
- Customer due diligence (CDD) required on all customers as per DABA Client Disclosure Rules 2018
- Suspicious activity reporting to the BMA and Financial Intelligence Agency
- Ongoing transaction monitoring obligations
- Record-keeping requirements under AML regulations
Key Restrictions
- Must hold a DABA license (Class F, M, or T) from the BMA for issuing/selling/redeeming digital assets
- Must comply with the BMA Guidance Note (May 2024) for Single Currency Pegged Stablecoin Issuers (SCPSIs)
- Reserves must be composed of high-quality liquid assets as per SCPS prudential standards
- Independent monthly reserve attestations and periodic audits required under SCPS Guidance (Nov 2024)
- Client assets (reserves) must be segregated from the operator's own assets
- Public offerings (>35 persons) require BMA authorization under the Digital Asset Issuance Act (DAIA)
- If stablecoin is considered a security, prior BMA approval required plus additional securities issuance policies
- Bermuda-incorporated entity required — no physical presence needed, but economic substance rules apply
- Proposed Payment Services Act (PSA) may create additional/alternative regime for stablecoins
Key Risks
- Regulatory overlap between DABA and proposed PSA creates transitional uncertainty
- Proposed PSA may introduce additional licensing requirements or exemptions for stablecoin issuers
- All tokens are treated as 'digital assets' under DABA — no carve-out for stablecoins vs. other tokens
- Economic substance requirements apply even without physical presence
- Reserve composition and segregation requirements may be operationally burdensome for smaller issuers
- Foreign-issued stablecoins status not explicitly addressed — local issuance is the primary regulatory focus
Evidence
This verdict synthesizes the following facts. Each fact links to its primary source(s).
Digital Asset Business Act 2018 (DABA): Core licensing framework.
Digital Asset Business Single Currency Pegged Stablecoin (SCPS) Guidance (Nov 2024): Prudential standards for reserves, attestations, resilience
Recent: BMA Guidance Note (May 2024) for Single Currency Pegged Stablecoin Issuers (SCPSIs).
Digital asset businesses in Bermuda (e.g., issuing, selling, redeeming tokens, exchanges, wallets, payment services) require licensing under the Digital Asset Business Act (DABA), with Class T (sandbox), Class M (modified), or Class F (full) licenses available. However, the stated minimum net assets of $100,000 and fees ($1,000 for Class T, $2,266 for Class M/F) are likely outdated; current evidence shows a Class F license has been actively issued and stablecoin/stellar blockchain initiatives are underway, indicating regulatory evolution that may have altered these specific requirements.
Public offerings/issuances: ICOs or public sales (e.g., to >35 persons) need BMA authorization under DAIA; exemptions available via section 16(2) filing. Bermuda-incorporated entities only; no physical presence required, but economic substance rules apply.
If issuing securities via digital assets, prior BMA approval is required, plus additional policies compliant with BMA securities issuance rules.
Additional: Proceeds of Crime (AML/ATF Financing) Regulations 2008 for anti-money laundering.
Supporting rules (2018): Digital Asset Business (Cybersecurity) Rules, (Client Disclosure) Rules, (Prudential Standards) (Annual Return) Rules.
Digital Asset Issuance Act (DAIA): Issuer-specific regime.
Proposed Payment Services Act (PSA): Regulates payments/digital wallets, with DABA exemptions and stablecoin options
No explicit "security token" carve-out: All tokens are "digital assets" under DABA section 3, including security, utility, payment, and NFT tokens.
Security-like tokens: Tokenized securities (e.g., representing equities, debt, or real-world assets) are digital assets regulable under DABA; BMA may require registration if they qualify as "securities" under broader laws.
Digital Asset Business Act (DAB Act, 2018): Requires licensing from the Bermuda Monetary Authority (BMA) for activities like issuing/selling digital assets, operating exchanges, custodial wallets, or payment services using digital assets. Licensed entities must segregate client assets, maintain bonds/insurance, and comply with cybersecurity/prudential rules.
Verdict Attribution
- Source:
- AI-Generated · Unreviewed
- AI synthesized:
- 2026-07-13 (deepseek-chat)
- Last updated:
- 2026-07-13
- Confidence:
- high
This verdict was produced by an AI model from the underlying facts. Confirm with counsel before relying on it for material decisions.
Conditional — a stablecoin issuer may operate in or from Bermuda, but must obtain a DABA license (Class F, M, or T) from the BMA, comply with the SCPS Guidance on reserve composition/segregation/attestations, obtain DAIA authorization for public offerings, and incorporate in Bermuda subject to economic substance rules.
Questions this verdict aims to answer
- What e-money or banking license is required to issue?
- What reserve composition, segregation, and audit rules apply?
- What redemption rights must be granted to holders?
- Are foreign-issued stablecoins permitted for use locally?