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Fintech is drawing investors and venture capitalists

The surge of interest in Bermuda as a jurisdiction for fintech business means that the island expects to see more investors and venture capitalists looking for new opportunities, particularly given Bermuda’s regulatory certainty and transparency.

This from Walkers partner Sarah Demerling and colleagues Matthew Cowman and Paul Waldron writing on the law firm’s page last week.

The regional update for the Americas discussed developments on the island, as well as in the British Virgin Islands.

The article notes Bermuda’s dominance in insurance-linked securities.

And it says: “Investors' appetite for portfolio diversification and interest in this relatively uncorrelated alternative asset class that is also acknowledged as a sustainable development investment for ESG continues to grow and the total assets under management of global ILS investment managers is approximately $100 billion. Many of the largest ILS investment managers have a physical presence in Bermuda.

“Bermuda remains the third largest offshore jurisdiction for traditional fund products, in terms of number of funds registered, with a reputation for quality clients and innovative structures.

“The most recently released figures saw total net asset values increase to $213.70 billion, representing a year-to-year increase for nearly all classes of funds as compared with 2020.

“As Bermuda already had in place a robust infrastructure for funds that meet international standards, there were no changes to the asset management regulatory landscape during 2021.”

The article also notes how well received was Incorporated Segregated Accounts (ISAC) legislation, building on the traditional concept of operating segregated accounts that have the benefit of statutory segregation between accounts, allowing a ring-fencing of assets and liabilities, but also introduces the ability for each account to have its own separate legal personality.

“During 2021, investment managers operating in the Digital Asset sector benefited from the introduction of this new legislation and we saw various classes of funds set up using an ISAC as a corporate vehicle.”

With regards to Fintech, the article says the sector is strengthening.

It states: “The sector includes a broad range of innovative financial products and services enabled by distributed ledger or blockchain technology, including NFTs (non-fungible tokens) and DeFi (decentralised finance).

“Legislation such as the Digital Asset Issuance Act, the primary legislation for all digital asset offerings in or from Bermuda, is aimed at prioritising regulatory certainty, investor confidence and compliance with international anti-money standards.

“Notably, Bermuda secured an excellent endorsement from the Caribbean Financial Action Task Force when it issued a positive evaluation of Bermuda's AML legislation and enforcement practices in early 2020.”

Sarah Demerling: Walkers partner (Photograph supplied)

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Published January 03, 2022 at 7:58 am (Updated January 03, 2022 at 7:55 am)

Fintech is drawing investors and venture capitalists

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