Bermuda’s financial services sector is focused on bringing digital-asset technology into wealth, insurance and investment structures, rather than treating cryptocurrency as a stand-alone market.

A new review by Citywealth said the island’s private wealth and fintech sectors are evolving around more flexible trust structures, intergenerational planning, artificial intelligence, digital identity and tokenisation.

The report said Bermuda is home to 53 licensed digital finance businesses, including 39 digital asset companies and 14 innovative insurer businesses. It added that the Government’s priorities include developing digital identity frameworks and supporting AI use in financial services.

Steven Rees Davies, a partner at Carey Olsen Bermuda specialising in fintech and digital assets, said the next phase would be shaped by several technologies.

“There is this whole sort of perfect storm coming of AI, digital assets and digital identity,” he said.

The report noted that advisers are seeing more demand from families for trust arrangements that can adapt to changing family circumstances, philanthropy and governance. It also found renewed interest in life insurance as a way to provide liquidity during generational wealth transfers, particularly where assets are tied up in businesses or property.

Bermuda’s role as a major insurance and reinsurance centre gives it a potential advantage in this area, the report said. It pointed to a Bermudian-licensed insurer offering bitcoin-denominated life insurance and annuity products as an example of a traditional financial product being adapted for digital-asset holders.

The review also discussed tokenisation, or ownership of conventional assets through the blockchain, as an area moving closer to the mainstream.

Tokenised funds and other assets could reduce settlement times, improve liquidity and lower operating costs, according to the report. It cited Franklin Templeton’s Benji platform, which provides blockchain access to money-market funds.

The report argued that the digital-assets sector is increasingly moving away from speculation and towards compliance, embedded regulation and partnerships with traditional banks.