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BMA issues digital asset business guidance

New rules: The BMA said new guidance provided standards clarity for certain DABA-licensed entities

The Bermuda Monetary Authority recently provided guidance for the digital asset industry on expected standards for issuers of Single Currency Pegged Stablecoins.

The BMA said the guidance would provide clarity for those licensed under the 2018 Digital Asset Business Act, on the standards the authority expects when Single Currency Pegged Stablecoins Issuers are conducting their business in a prudent manner.

SCPS is a category of digital assets that aims to maintain a stable value relative to a specified asset or a pool or basket of assets in a single fiat currency, providing stability when compared to unbacked digital assets.

The BMA’s view is that there is potential for SCPS to become a widespread form of payment and foster innovation across the financial services sector.

The regulator said it is committed to protecting financial services customers while supporting responsible innovation locally and in the global markets.

But the guidance noted that it is incumbent on digital asset businesses to regularly assess risks arising from their business model and implement the relevant standards commensurate with the overall risk profile.

The guidance reads: “The authority appreciates that DABs have varying risk profiles arising from the nature, scale, complexity, and inherent risk profile of the business.

“Those DABs with higher risk profiles would require more comprehensive governance and risk management frameworks to conduct business in a sound and prudent manner.

“Accordingly, the authority will assess the DAB’s compliance with the guidance in a proportionate manner relative to its inherent risk (ie, nature, scale, complexity and risk profile).

“These elements will be considered collectively rather than individually.”

• For more on the Digital Asset Business Single Currency Pegged Stablecoins Guidance, see Related Media

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Published June 14, 2024 at 3:08 pm (Updated June 17, 2024 at 6:19 pm)

BMA issues digital asset business guidance

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