Bermuda

Retail_Trading_Status

Allowed-Regulated High Confidence

Analysis ID: #608
Version: Latest
Created: 2025-12-12 03:54
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Executive Summary

Cryptocurrency activities, including retail trading, are fully legal and comprehensively regulated in Bermuda under the Digital Asset Business Act 2018 (DABA). The Bermuda Monetary Authority (BMA) oversees a tiered licensing regime that permits digital asset exchanges, custodians, and payment providers to operate and serve retail clients. There are no specific prohibitions on individuals buying, selling, or holding digital assets, and the jurisdiction is known for its tax-neutral environment, levying no income or capital gains taxes on crypto transactions.

Detailed Explanation

Cryptocurrency activities, including retail trading, are fully legal and comprehensively regulated in Bermuda. The jurisdiction operates under a clear, tiered regulatory framework established by the Digital Asset Business Act 2018 (DABA), which came into force on September 10, 2018. This cornerstone legislation defines 'digital asset business' and mandates that all such businesses, including exchanges, custodians, and payment providers, must be licensed by the primary regulator, the Bermuda Monetary Authority (BMA). The BMA oversees a three-class licensing system: Class F (Full), Class M (Modified/Sandbox), and Class T (Test), the latter two providing a supervised environment for startups to test products. For digital asset issuances, the Digital Asset Issuance Act 2020 (DAIA), enacted on May 6, 2020, provides a specific framework, requiring issuers to obtain BMA authorization and publish a digital asset issuance document. All licensed entities must comply with Anti-Money Laundering (AML) and Anti-Terrorist Financing (ATF) regulations and adhere to client disclosure rules, such as the Digital Asset Business (Client Disclosure) Rules 2018 (BR 123 / 2018), which mandate clear communication of risks and fees to customers.

A significant operational requirement is the physical presence mandate; licensed digital asset businesses must maintain their head office in Bermuda, ensuring 'mind and management' reside on the island. There are no specific prohibitions on individuals buying, selling, or holding digital assets. Bermuda's tax-neutral environment, which levies no personal income or capital gains tax, makes crypto profits generally tax-free for individuals. The jurisdiction is noted for its proactive regulatory approach, including being a hub for stablecoin issuers like Circle, and for facilitating banking access through licensed institutions such as 'Jewel Bank' specifically serving the digital asset sector. The BMA remains active in updating guidance to match industry developments, reinforcing Bermuda's position as a regulated yet innovative jurisdiction for digital asset business.

Summary Points

Regulatory Analysis Summary: Bermuda

I. Regulatory Status

Status: Allowed-Regulated
Cryptocurrency activities, including retail trading, are fully legal and comprehensively regulated.
There are no specific prohibitions on individuals buying, selling, or holding digital assets.

II. Key Regulatory Bodies

Bermuda Monetary Authority (BMA): The primary regulator for all digital asset businesses, overseeing licensing and compliance.

III. Important Legislation

Digital Asset Business Act 2018 (DABA) (Enacted: 2018-09-10)
- The cornerstone legislation establishing the licensing framework for digital asset businesses.
- Defines 'digital asset business' and created three license classes: Class F (Full), Class M (Modified/Sandbox), and Class T (Test).
Digital Asset Issuance Act 2020 (DAIA) (Enacted: 2020-05-06)
- Provides the specific framework for the issuance of digital assets to the public, replacing earlier ICO legislation.
- Requires issuers to seek BMA authorization and publish a digital asset issuance document.
Digital Asset Business (Client Disclosure) Rules 2018 (BR 123 / 2018) (Enacted: 2018-09-01)
- Mandates that licensed businesses provide clear disclosures to clients regarding risks, fees, and terms of service.

IV. Compliance Requirements

Mandatory licensing for digital asset businesses under DABA 2018.
Mandatory compliance with Anti-Money Laundering (AML) and Anti-Terrorist Financing (ATF) regulations.
Adherence to client disclosure rules as per the Digital Asset Business (Client Disclosure) Rules 2018.

V. Notable Restrictions or Limitations

Physical Presence Requirement: Licensed digital asset businesses must have their head office in Bermuda, ensuring 'mind and management' reside on the island.
While banking access is generally difficult globally, Bermuda has taken steps to improve fiat on/off ramps.

VI. Recent Developments or Notes

Tax Neutrality: Bermuda has no personal income tax or capital gains tax, meaning crypto profits are generally tax-free for individuals.
Tiered Licensing: The BMA's licensing regime includes a unique 'sandbox' approach (Class M and T licenses) for startups.
Stablecoin Hub: Bermuda is a significant jurisdiction for stablecoin issuers; notably, Circle (issuer of USDC) holds a Class F license.
Banking Access: Bermuda has licensed 'Jewel Bank' specifically to serve the digital asset sector.
The BMA is extremely active and responsive, often updating guidance notes to match industry developments.

Full Analysis Report

Bermuda is widely recognized as one of the world's most progressive and clearly regulated jurisdictions for cryptocurrency. The regulatory framework is anchored by the Digital Asset Business Act 2018 (DABA), which was one of the first comprehensive laws globally to specifically address the custody, exchange, and issuance of digital assets. The Bermuda Monetary Authority (BMA) serves as the sole regulator, enforcing a regime that balances innovation with strict adherence to international AML/KYC standards. Unlike 'regulation by enforcement' seen in other regions, Bermuda offers a clear statutory path for businesses to operate legally.

For retail investors, the environment is open and permissive. There are no laws prohibiting residents from buying, holding, or trading cryptocurrencies. In fact, the government actively encourages the sector. The regulatory burden falls entirely on the service providers (exchanges, wallet providers, etc.), who must obtain a license to solicit or serve clients from within Bermuda. The licensing framework is tiered: Class F for fully regulated established firms, Class M for a 'sandbox' environment allowing companies to grow under supervision, and Class T for pilot testing. This structure has attracted major global players, most notably Circle, the issuer of the USDC stablecoin, which holds a Class F license.

In 2020, the framework was expanded with the Digital Asset Issuance Act (DAIA), which streamlined the process for Initial Coin Offerings (ICOs) and token issuances, moving supervision from the Registrar of Companies directly to the BMA. This change consolidated oversight and provided issuers with a more specialized regulatory partner. Furthermore, the BMA has continued to update its guidance, releasing specific codes of practice for custody and cybersecurity, ensuring that licensed entities maintain high operational standards to protect consumer funds.

From a tax perspective, Bermuda is highly attractive to retail traders. The territory does not levy personal income tax, capital gains tax, or withholding tax on digital asset transactions. This tax-neutral status, combined with the legal certainty provided by DABA, positions Bermuda as a premier hub for both crypto businesses and high-net-worth individual traders. However, the strict physical presence requirements for businesses mean that 'shell' crypto companies cannot easily obtain licensure; they must demonstrate real economic substance and management on the island.

Bermuda is widely recognized as one of the world's most progressive and clearly regulated jurisdictions for cryptocurrency. The regulatory framework is anchored by the Digital Asset Business Act 2018 (DABA), which was one of the first comprehensive laws globally to specifically address the custody, exchange, and issuance of digital assets. The Bermuda Monetary Authority (BMA) serves as the sole regulator, enforcing a regime that balances innovation with strict adherence to international AML/KYC standards. Unlike 'regulation by enforcement' seen in other regions, Bermuda offers a clear statutory path for businesses to operate legally.

For retail investors, the environment is open and permissive. There are no laws prohibiting residents from buying, holding, or trading cryptocurrencies. In fact, the government actively encourages the sector. The regulatory burden falls entirely on the service providers (exchanges, wallet providers, etc.), who must obtain a license to solicit or serve clients from within Bermuda. The licensing framework is tiered: Class F for fully regulated established firms, Class M for a 'sandbox' environment allowing companies to grow under supervision, and Class T for pilot testing. This structure has attracted major global players, most notably Circle, the issuer of the USDC stablecoin, which holds a Class F license.

In 2020, the framework was expanded with the Digital Asset Issuance Act (DAIA), which streamlined the process for Initial Coin Offerings (ICOs) and token issuances, moving supervision from the Registrar of Companies directly to the BMA. This change consolidated oversight and provided issuers with a more specialized regulatory partner. Furthermore, the BMA has continued to update its guidance, releasing specific codes of practice for custody and cybersecurity, ensuring that licensed entities maintain high operational standards to protect consumer funds.

From a tax perspective, Bermuda is highly attractive to retail traders. The territory does not levy personal income tax, capital gains tax, or withholding tax on digital asset transactions. This tax-neutral status, combined with the legal certainty provided by DABA, positions Bermuda as a premier hub for both crypto businesses and high-net-worth individual traders. However, the strict physical presence requirements for businesses mean that 'shell' crypto companies cannot easily obtain licensure; they must demonstrate real economic substance and management on the island.

Source Evidence

Primary and secondary sources cited in this analysis

Digital Asset Business Act 2018 primary (law_text)

2018-09-10

"A person shall not carry on digital asset business in or from within Bermuda unless that person is a licensed undertaking."

BMA Digital Assets Supervision primary (regulator)

2024-05-01

"The BMA has implemented a comprehensive regulatory framework for digital asset business... protecting the reputation of Bermuda as a financial centre and protecting the interests of clients."

Digital Asset Issuance Act 2020 primary (law_text)

2020-05-06

"An Act to regulate the issuance of digital assets; to provide for the Bermuda Monetary Authority to be the regulatory authority."

Global Legal Insights - Blockchain & Cryptocurrency Laws and Regulations 2024 | Bermuda secondary (analysis)

2023-10-21

"There are no Bermudian laws, regulations or other restrictions governing the participation of persons resident or situated in Bermuda in the purchase, holding or sale of digital assets."

Circle Internet Financial (Bermuda) Limited License secondary (news)

2024-01-01

"Circle International Bermuda Limited holds a Class F Digital Asset Business license."