Bermuda is positioning itself as the destination of choice for cryptocurrency companies with a comprehensive regulatory framework, despite the macroeconomic turmoil and major crypto sell-off.
Bermuda, one of the first countries globally to implement a robust legal and regulatory framework for digital assets, could add to the 14 already registered cryptocurrency companies, despite the recent collapse of TeraUSD and the collapse in bitcoin prices. .
“We are aware of the recent devaluation in the price of cryptocurrencies and are confident that it does not threaten the island’s potential to become a crypto hub,” said Jason Hayward, the island nation’s Minister of Economy and Labor.
Lack of clarity hinders development
Since Bermuda is an old center for the insurance and reinsurance industry and 27% of its economy comes from international companies, locals are well equipped to handle the influx of new crypto companies competing with the likes of Malta and Liechtenstein. The regulations come at a time when crypto companies are calling the lack of regulatory clarity a significant impediment to the growth of the industry. The US is one of the countries with a lack of regulatory clarity. President Biden recently issued an executive order launching a multi-agency research effort to regulate crypto. At the same time, the Financial Conduct Authority in the UK has set strict anti-money laundering policies for companies to comply with before they are allowed to do business.
It’s been a few years since the law was made
Bermuda has been doing its homework since 2018, when it launched new guidelines for initial coin offerings and digital business assets, namely the Companies and Limited Liability Companies Amendment Act 2018 and the Digital Asset Business Act. Companies use initial coin offerings to raise capital by issuing new tokens, giving holders a particular utility or decision-making stake in the company’s business activities. Initial coin offerings are treated as prohibited business activities, which require the approval of the Bermuda Monetary Authority. A business does not need to have a physical office to issue tokens, but must be registered in Bermuda. Registered companies must comply with anti-money laundering and counter-terrorism financing regulations.
The CEO of monetary regulator Craig Swan said that the island nation has already registered 14 compliant companies, four of which are actual crypto companies, while others run other digital asset businesses. BlockFi, stablecoin issuer Circle and Bittrex Inc. all have regional operations.
The President of the Association for Financial and International Trade, David Schwarz, said that Bermuda is at the forefront of crypto regulation, while acknowledging the need for proactive policing and enforcement of applicable laws.
BMA has launched training for banks and insurers to strengthen their resolve to partner with crypto companies by educating them on the anti-money laundering policies required by BMA from crypto companies.
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