Digital assets and Bermuda’s fintech future
The Government of Bermuda set the stage for developing the island's fintech sector in early 2018 by announcing its agenda to develop a legal and regulatory framework that created a welcoming and stable environment for those operating in the evolving global fintech space.
Government proceeded to prudently enact the Digital Asset Business Act 2018, which created a framework to regulate digital asset businesses, and the initial coin offering regime, which was embedded in Bermuda's Companies Act and limited liability company legislation, that provided for companies registered in Bermuda and willing to meet the applicable criteria to seek permission to issue digital assets to the public.
The Government's commitment to ensuring Bermuda is a leader in the fintech sector has been emphasised by recent changes to the ICO regime.
On May 6, Government enacted the Digital Asset Issuance Act 2020, which replaces the ICO regime as the primary legislation for all digital asset offerings in or from Bermuda.
Previously, digital asset offerings to the public from Bermuda required the consent of the Minister of Finance. However, under DAIA, digital asset issuance will now be regulated by the Bermuda Monetary Authority.
Another change is that all undertakings authorised to launch a digital asset issuance in or from Bermuda are required to appoint a local representative. The person appointed must receive the approval of the BMA, and as such, the local representative must be identified in the digital asset issuance application. Furthermore, the local representative is required to maintain an office in Bermuda.
These developments are important because Government has stated from the beginning that development of the island's fintech sector will prioritise regulatory certainty, investor confidence, compliance with international know your client and anti-money laundering standards, and the creation of jobs in Bermuda.
The BMA is a globally recognised regulator of various industries; transferring the application process and oversight of digital asset issuances to their purview will ensure the Government's priorities set out above are met.
Furthermore, the local representative requirement will create jobs locally, while the requirements to be AML and KYC compliant will mean companies looking to apply for a DAIA authorisation will need a compliance officer and staff to facilitate these processes, creating further jobs and opportunities in Bermuda for individuals looking to pursue a career in compliance.
This new framework will ensure that companies authorised to conduct digital asset issuances are of a high calibre, which in turn will bring investors and participants comfort and security in knowing that the projects that they invest or participate in have a level of credibility that is not always obvious in this sector.
In addition to the recent developments in relation to digital asset issuance, the Government has announced a policy that invites international remote workers and non-Bermudian postsecondary students to stay and work from Bermuda for one year.
The one-year residency certificate policy was announced on July 17 by Jason Hayward, the Minister of Labour. It is due to come into effect on Saturday and will allow successful applicants who are able to work remotely from Bermuda, to do so.
While this policy comes in the wake of the Covid-19 virus, and is not entirely fintech focused, the connection and potential benefits for Bermuda cannot be ignored. The policy could provide the perfect opportunity to demonstrate what the island has to offer, while persons looking to take advantage of Bermuda's fintech legislation can come and experience working remotely from the island.
• Attorney Kit Cunningham is an associate and a member of the Corporate department at Appleby. A copy of this column can be obtained on the Appleby website at www.applebyglobal.com. This column should not be used as a substitute for professional legal advice. Before proceeding with any matters discussed here, persons are advised to consult with a lawyer