The Bermuda Monetary Authority has doubled down on a “same risk, same rules” approach to regulating tokenised assets, saying activities will be judged by their economic substance rather than the technology they use.

In a consultation paper released this week, the regulator set out plans to refine its framework for asset tokenisation while keeping aligned with the financial services laws the island already has.

“This section outlines the Authority's principles-based regulatory framework for asset tokenisation that emphasises substance over form, ensuring assets and activities are regulated according to their economic and functional characteristics rather than their technological implementation,” the BMA said.

The approach is part of a broader effort to integrate tokenised products like digital representations of equities, funds or insurance contracts into Bermuda’s established regulatory regimes, rather than creating brand-new rules.

The authority said its proposals are designed to support innovation while keeping consistent standards across the market.

“The proposed framework aims to carefully tailor regulatory developments to support innovation, while adhering to a ‘same risk, same regulatory outcome’ principle,” it added.

The consultation builds on feedback from industry stakeholders, who had raised concerns about regulatory overlap and the potential for repetitive licensing requirements where tokenised products fall under more than one regime.

To address this, the BMA is proposing a more streamlined structure, including harmonised definitions and targeted exemptions, aimed at simplifying without weakening oversight.

The paper also outlines a detailed framework covering legal classification, risk management, custody and cyber resilience for tokenised assets.

Stakeholders have until June 30 to submit feedback, after which the authority will determine next steps, including potential legislative amendments.