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Bermuda

Retail_Trading_Status

Allowed-Regulated Unknown
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Analysis ID
#19
Version
Archived
Created
2025-04-12 06:38
Workflow Stage
Live

Executive Summary

Bermuda permits individuals to buy, sell, and hold cryptocurrencies under a 'Allowed-Regulated' status. The Bermuda Monetary Authority (BMA) oversees this activity, primarily governed by the Digital Asset Business Act 2018 (DABA), which requires digital asset businesses to obtain a license and adhere to AML/KYC and consumer protection measures. While there are no direct restrictions on individual crypto trading, the DABA indirectly regulates retail users by imposing requirements on licensed platforms. The BMA also issues warnings about unlicensed entities.

Key Pillars

The primary regulator is the Bermuda Monetary Authority (BMA). The regulatory framework is built upon core compliance requirements including AML/CFT, Customer Due Diligence (CDD) also known as Know Your Customer (KYC), and the Digital Asset Business Act 2018 (DABA). Businesses conducting digital asset activities are required to obtain a license from the BMA.

Landmark Laws

Digital Asset Business Act 2018 (DABA): Enacted to provide a licensing regime for businesses conducting digital asset activities in or from Bermuda, including operating an exchange or providing custodial wallet services. It mandates compliance with AML/CFT regulations.

Considerations

Crypto assets are referred to as "digital assets" in Bermuda legislation. Licensed businesses are required to establish AML/CFT policies and procedures, including customer due diligence, ongoing monitoring, and reporting of suspicious transactions. The BMA issues public warnings about unlicensed or fraudulent entities, highlighting the risks associated with unregulated platforms. Trading with unlicensed or offshore platforms carries inherent risks.

Notes

A legal guide from October 2024 notes that there are no licensing requirements imposed on any person merely by virtue of that person holding any form of digital asset, unless that person does so in the course of its business and on behalf of another. The proprietary use and trading of cryptoassets is not prohibited or regulated in Bermuda, but operating a digital asset exchange or acting as a digital asset services vendor requires a license. The BMA issued a warning in January 2024 about unregulated entities.

Detailed Explanation

As of April 12, 2025, Bermuda permits individual citizens and residents to buy, sell, and hold cryptocurrencies, broadly termed "digital assets." No specific laws directly prohibit individuals from proprietary trading or holding digital assets for their own account. However, the regulatory environment is robust, primarily governed by the Digital Asset Business Act 2018 (DABA) and overseen by the Bermuda Monetary Authority (BMA). Bermuda aims to be a leading jurisdiction for digital asset businesses, with a framework that provides legal certainty, fosters innovation, and adheres to international standards for Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT). The DABA mandates that businesses conducting "digital asset business" in or from Bermuda obtain a license from the BMA. This includes issuers, sellers, redeemers, exchanges, payment service providers, custodial wallet providers, digital asset derivative exchange providers, and digital asset services vendors (including those trading on behalf of others or acting as market makers). While the DABA directly regulates businesses, its requirements indirectly impact retail users. Licensed entities must adhere to operational standards including AML/CFT compliance, requiring Customer Due Diligence (CDD), also known as Know Your Customer (KYC), ongoing monitoring, and reporting of suspicious transactions. Cybersecurity, client disclosure, and prudential standards, including the segregation of client assets, are also mandated. The BMA actively supervises licensed entities and issues public warnings about unlicensed or fraudulent entities purporting to operate from Bermuda or targeting residents, as evidenced by a BMA warning issued in January 2024. Therefore, while individuals are free to trade crypto, the environment is regulated through requirements imposed on service providers, primarily concerning AML/KYC and consumer protection measures. Trading with unlicensed or offshore platforms carries inherent risks.

Summary Points

Bermuda: Retail Cryptocurrency Trading Status (as of April 12, 2025)

Overall Status: Allowed-Regulated

I. Regulatory Bodies & Roles

  • Bermuda Monetary Authority (BMA):
    • Primary regulatory body overseeing digital asset businesses.
    • Responsible for licensing, supervision, and enforcement.
    • Issues public warnings about unlicensed or fraudulent entities.

II. Key Legislation & Regulations

  • Digital Asset Business Act 2018 (DABA):
    • The primary legislation governing digital asset businesses in Bermuda.
    • Establishes a licensing regime for entities conducting "digital asset business."
    • Defines "digital asset business" broadly, including exchanges, custodians, issuers, and payment providers.

III. Retail Trading Status & Impact

  • Permissibility for Individuals:
    • Individuals are legally permitted to buy, sell, and hold cryptocurrencies.
    • No specific laws prohibit or restrict proprietary trading or holding of digital assets for personal accounts.
  • Indirect Regulation via DABA:
    • While individuals are not directly regulated, the DABA's requirements for licensed businesses impact retail users.
    • Individuals using Bermuda-licensed platforms are subject to the platform's compliance requirements.

IV. Compliance Requirements for Licensed Businesses (Impacting Retail Users)

  • Anti-Money Laundering/Counter-Terrorist Financing (AML/CFT):
    • Robust policies and procedures required, including:
      • Customer Due Diligence (CDD) / Know Your Customer (KYC) verification.
      • Ongoing monitoring of transactions.
      • Reporting of suspicious transactions.
  • Cybersecurity: Strict rules to protect systems and client data.
  • Client Disclosure: Clear communication about risks and services.
  • Prudential Standards: Requirements related to capital, liquidity, and risk management, including segregation of client assets.

V. Restrictions & Limitations

  • Trading with Unlicensed Platforms:
    • Carries inherent risks.
    • BMA issues warnings about unlicensed or fraudulent entities.
  • Indirect Compliance:
    • Retail users interacting with Bermuda-licensed platforms must comply with KYC/AML requirements.

VI. Recent Developments & Changes

  • Focus on Comprehensive Framework: Bermuda has positioned itself as a leading jurisdiction for digital asset businesses by establishing a comprehensive framework.
  • Emphasis on International Standards: The framework is designed to ensure adherence to high international standards, particularly concerning AML/CFT.
  • Active Supervision: The BMA actively supervises licensed entities.

VII. Source Links

Full Analysis Report

Report: Retail Cryptocurrency Trading Status in Bermuda

Date: April 12, 2025

Topic: Retail_Trading_Status

Description: Assess whether individual citizens and residents in Bermuda are legally permitted to buy, sell, and hold cryptocurrencies. Detail the regulatory environment surrounding this activity (e.g., KYC/AML requirements imposed on platforms, general warnings issued).

Retail_Trading_Status: Bermuda

  1. Status: Allowed-Regulated

  2. Narrative Explanation:
    Bermuda permits its individual citizens and residents to buy, sell, and hold cryptocurrencies (referred to broadly as "digital assets" in legislation). There are no specific laws prohibiting or restricting individuals from engaging in proprietary trading or holding of digital assets for their own account.

    However, the regulatory environment surrounding these activities is robust, primarily governed by the Digital Asset Business Act 2018 (DABA) and overseen by the Bermuda Monetary Authority (BMA). Bermuda has positioned itself as a leading jurisdiction for digital asset businesses, establishing a comprehensive framework designed to provide legal certainty, foster innovation, and ensure adherence to high international standards, particularly concerning Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT).

    The DABA mandates that businesses conducting "digital asset business" in or from Bermuda must obtain a license from the BMA. This includes entities such as:
    * Issuers, sellers, or redeemers of digital assets.
    * Digital asset exchanges.
    * Payment service providers using digital assets.
    * Custodial wallet providers.
    * Digital asset derivative exchange providers.
    * Digital asset services vendors (including those trading on behalf of others or acting as market makers).

    While the DABA directly regulates businesses rather than individual retail traders, its requirements indirectly impact retail users who interact with Bermuda-licensed platforms. Licensed entities are subject to stringent operational standards, including:
    * AML/CFT Compliance: Robust policies and procedures, including mandatory Customer Due Diligence (CDD), also known as Know Your Customer (KYC), ongoing monitoring, and reporting of suspicious transactions. This means individuals using licensed Bermudian platforms will need to verify their identity.
    * Cybersecurity: Strict rules to protect systems and client data.
    * Client Disclosure: Rules requiring clear communication about risks and services.
    * Prudential Standards: Requirements related to capital, liquidity, and risk management, including the segregation of client assets.

    The BMA actively supervises licensed entities and issues public warnings about unlicensed or fraudulent entities purporting to operate from Bermuda or targeting residents. This underscores the regulated nature of the ecosystem for those engaging with licensed providers.

    Therefore, while individuals are free to trade crypto, the environment, particularly when using locally licensed service providers, is regulated through the requirements imposed on those providers, primarily concerning AML/KYC and consumer protection measures. Trading with unlicensed or offshore platforms carries inherent risks, as highlighted by BMA warnings.

  3. Supporting Excerpts:

    • On Permissibility for Individuals: "Under current Bermuda law, and under the DABA and DAIA, no licensing requirements are imposed on any person merely by virtue of that person holding any form of digital asset, unless that person does so in the course of its business and on behalf of another..." (Source: Blockchain & Cryptocurrency Laws and Regulations 2025 – Bermuda, via ICLG / Carey Olsen, Oct 2024)
    • On Proprietary Trading: "The proprietary use and trading of cryptoassets is not prohibited or regulated in Bermuda. However, operating a digital asset exchange... acting as a digital asset services vendor (which includes conducting a digital asset transaction on behalf of another person...)... are all activities captured by the DAB Regime and are regulated activities that may require a licence." (Source: Legal 500 Country Comparative Guides - Bermuda: Blockchain)
    • On Regulation via DABA: "The Digital Asset Business Act 2018 (the Act) is the statutory basis for regulating Digital Asset Business (DAB) in Bermuda. The Act provides for a licensing regime for any person or undertaking (unless otherwise exempted) which carries out [...] activities [like] operating as an electronic exchange; providing custodial wallet services." (Source: BMA - Digital Assets Supervision and Regulation)
    • On AML/KYC Requirements for Licensed Businesses: "Digital asset businesses are required to establish policies and procedures to prevent money laundering and terrorist financing. These policies and procedures must cover customer due diligence, ongoing monitoring, reporting of suspicious transactions, record-keeping, internal controls, risk assessment and management..." (Source: Blockchain & Cryptocurrency Laws and Regulations 2025 – Bermuda, via ICLG / Carey Olsen, Oct 2024)
    • On AML/KYC Compliance: "Companies are required to comply with local and international anti-money laundering (AML) and counter-terrorist financing (CFT) requirements, including conducting customer identification procedures (KYC)." (Source: Regulated United Europe - Bermuda Crypto regulations)
    • On BMA Warnings: "Conducting business with unregulated entities carries an increased risk for potential investors, especially when dealing with entities which make false representations in their promotional material. Anyone who conducts business with this entity does so at his or her own risk." (Source: Bermuda:Re+ILS / BMA Warning, Jan 2024)

  4. Source Links:

This report reflects the regulatory status based on information available up to April 12, 2025.

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