In the rapidly evolving world of digital assets, Bermuda has emerged as a leading jurisdiction for innovative blockchain projects and institutional-grade regulation. In this interview for HashPoint Advisory, Carey Olsen partner and one of the key figures driving regulatory innovation on the island, Steven Rees Davies, considers Bermuda's unique position and its role in shaping the future of on-chain finance.
Q: Steven, can you tell us a bit about your background and what drew you into crypto?
A: I started my legal career in London, later
qualifying in New York. I moved to Bermuda in 2008, initially for
personal reasons but stayed for the career opportunities. My legal
background and experience is as a corporate M&A lawyer with a
focus on international structuring, but with a technology focus. In
2016 I started to learn about blockchain technology and when the
Premier of Bermuda returned from Davos promulgating the idea of
Bermuda becoming a leading digital asset jurisdiction I
enthusiastically rolled up my sleeves and volunteered to
contribute. Since then, I've helped Bermuda develop a
progressive digital asset regulatory framework, securing licenses
and supporting projects like Mountain Protocol (acquired by
Anchorage), XBTO, Hashkey and Open Eden. Bermuda's long history
in financial services and (re)insurance made it a natural evolution
for digital finance and risk management.
Q: How does Bermuda's digital asset regulatory framework differ from those of other offshore jurisdictions, such as the Cayman Islands or BVI?
A: Bermuda, the Cayman Islands, and the British
Virgin Islands (BVI) each provide robust regulatory environments
for digital asset businesses, with similar common law principles
yet distinct approaches tailored to different target markets.
Bermuda's Digital Asset Business Act (DABA) is probably the
only fully comprehensive framework, providing clear legal and
regulatory certainty and licensing opportunities for the broadest
range of blockchain activities, including tokenisation, stablecoin
projects, issuance, selling and redeeming of digital assets,
custodial services, brokers, market makers, trustee services,
exchanges, derivative exchanges, payment services using digital
assets and lending or rehypothecation services.
Jurisdictions that introduced a Virtual Asset Service Provider (VASP) regime following FATF's determination in 2019 to include such activities within the global standard for AML/ATF compliance provide a less comprehensive list of licenced activities. Each jurisdiction has its strengths, with Bermuda distinguished by its broad, all-encompassing yet principles based regulatory approach. The question of choice comes down to whether you want all of your activities to be regulated and does a particular regime recognise certain types of legal arrangements, like DAOs, or the specific use of blockchain technology critical to a given project.
Q: How does Bermuda support both startups and large firms?
A: Bermuda's tiered licensing regime under the
DABA provides a flexible and scalable regulatory framework that
supports both institutional-grade businesses and early-stage
innovators. From Class T licences for people seeking to beta test
their project infrastructure in the real market, through Class M
sandbox licenses for companies seeking to scale, up to Class F for
fully operational firms like Coinbase, Kraken, and Circle, the
framework allows companies to test, launch and scale within a
regulated environment where application of regulatory oversight is
proportionate to the nature, scale and complexity of the projects
themselves..
Q: How does Bermuda's legal framework address asset protection?
A: This is where Bermuda really stands out. We
built legal structures specifically designed to segregate and
protect customer assets. You can structure a token with:
- A trust model
- A Segregated Account Company (SAC)
- Or an SPV + Purpose Trust, like in a traditional securitization transaction
These give legal certainty, insolvency protection, and redemption rights. In other words, if something goes wrong with the company itself, customer assets are protected from company creditors.
Q: What does Bermuda's first tokenized bond signify for on-chain capital markets?
A: It shows Bermuda's readiness for serious
capital markets innovation. The issuance demonstrates how
structured, governed digital debt can thrive under Bermuda law,
paving the way for yield-generating stablecoins and hybrid digital
securities backed by traditional assets.
Q: Who is building in Bermuda today?
A: We're working with a diverse range of
blockchain and fintech firms, including RWA tokenisation, digital
asset custodians, digital asset and digital asset derivative
exchanges, tokenized funds, and stablecoin issuers to name a few.
These clients value Bermuda's regulatory credibility and global
scalability. Having been regulating the sector for almost 8 years,
the BMA has a dedicated fintech team that understand the
technology, the unique risks and the business opportunities that
are coming down the pipeline and so, with global credibility, can
manage sophisticated applications within a matter of months not
years. This speed to market mixed with credible regulation is very
attractive to those with legitimate and pre-funded projects.
Q: As MiCA takes effect, how does Bermuda's approach to digital asset regulation stack up?
A: MiCA brings clarity and access to the EU
market, but commentators have publicly criticized it for being too
restrictive, especially for stablecoins, which as an example must
hold reserves within the EU. Bermuda offers more flexibility,
allowing reserve assets to be held globally, focusing on risk and
transparency rather than geography. Its adaptable regulation also
makes Bermuda attractive for projects seeking agility. Whilst a
Bermuda licence does not grant access to the EU market, it does
provide a much broader array of products and services capable of
servicing "rest of world" jurisdictions (i.e. those
jurisdictions where it is not otherwise illegal or prohibited to
offer such services without a local licence)..
Q: What impact are you seeing from the recent shifts in the US regulatory landscape?
A: There's clear momentum in the US,
especially following the change in administration and with new
legislation like the GENIUS Act. The US wants to assert leadership
in digital assets but, as always, the devil is in the details.
Implementation will take time, and there's still uncertainty
around timelines and enforcement. In the meantime, Bermuda offers a
clear, trusted framework that's already applying globally
recognised standards from a risk management, corporate governance
and compliance perspective, making it a practical jurisdiction for
projects that want to move now rather than wait.
Q: Where does Bermuda fit in the global landscape?
A: Bermuda is becoming the go-to jurisdiction for
projects seeking clarity and regulatory robustness today. With over
70 years as a trusted hub for (re)insurance and global finance,
Bermuda has extended that reputation through a pioneering approach
to digital asset regulation. It's one of the few offshore
jurisdictions recognized by the US, UK, and EU as meeting high
compliance standards in its existing (re)insurance sector which
lends credibility to how it approaches digital assets.
The Bermuda Monetary Authority continues to lead with innovation, including testing embedded compliance in DeFi, where smart contracts carry real-time regulatory logic. This blend of credibility, flexibility, and forward-thinking makes Bermuda uniquely positioned in the global digital asset landscape.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
