Bermuda: a fintech hotspot

Michelle Chivunga is a member of the Bermuda Fintech Advisory Board

In 2018, Bermuda created the foundation for fintech regulation with the Digital Asset Business Act (DABA), a ground-breaking set of laws and policies that provided legal clarity and transparency for businesses in the fintech industry.

Shortly thereafter, DABA was enhanced with the Digital Asset Issuance Act 2020 and the Digital Asset Issuance Rules 2020 which updated the criteria and provided clarity regarding the issuance of digital assets.

Modelled on the success of Bermuda’s insurance and re-insurance industry, and leveraging the global recognition of the Island’s digital leadership and unravelled risk-management spurred by an active and inclusive regulator of financial services, the Bermuda Monetary Authority, a solid, secure regulatory environment has been paved for both global and local innovative companies.

The 3 Cs of fintech

Bermuda’s collaborative approach toward building best practices exemplified in the re/insurance industry was the perfect template to establish an enviable regulatory framework, through which risks are mitigated via the three Cs of fintech: cybersecurity, custody and compliance.

  • Cybersecurity: is a significant industry issue where it is no longer a question of “if you’ll get hacked” but “when.” The framework has put in place clear requirements around the means to prevent cyber-attacks and to respond and mitigate them if, or more aptly when, they happen. Cybersecurity is one of the world’s biggest areas of concern particularly as institutions are still grappling with a relatively new digital economy and new ways of doing business in a VUCA1 and COVID-led environment. Bermuda is driving forward innovative approaches to providing a cyber-proof fintech ecosystem which is attracting more businesses to the Bermudian market. For digital value to be exchanged, secure and robust systems must be in place. Cybersecurity is centre stage for Bermuda and preventative measures are critical to mitigate against future risk. A cyber-led digital economy is necessary to boost productivity and aid economic growth.
  • Custody: the framework is built around ensuring there are clear procedures, protections, and guidance to make sure that Bermuda companies distinguish themselves, can follow best practice, and are globally competitive. This has given them additional credibility and security.
  • Compliance: compliance is the elephant in the room in terms of risk. Part of the reason finance has been so slow to adapt to technology is the ever-increasing list of requirements pursuant to Know Your Customer and Anti Money Laundering regulations, which can be costly and complex. The challenge is that many companies prioritise growth, often at the expense of proper compliance, and that introduces significant business risk.

Bermuda has led the way to support businesses navigate the dynamics and complexity of compliance and places prominently within its frameworks the significance of ensuring that data is protected from misuse.

Three licenses

Bermuda’s structure allows companies to progress a concept from an idea until go-to-market readiness. DABA’s licensing regime provides different licenses that vary depending on the company’s growth stage and readiness:

  • The test license (Class T – test “alpha testing environment”) provides an environment for businesses looking to develop a business model. The purpose is to gain understanding of the risks of that business so that it can define for itself appropriate risk management policies and procedures. Self-risk management also enables greater accountability and responsibility by the businesses.
  • The sandbox license (Class M – modified, “beta testing environment”) allows the operation of specific business activities within a defined scope and time period. This is designed for companies whose principals understand their business model and have scoped out the risk management policies and procedures but have not yet demonstrated the ability to implement them. The sandbox provides the environment to experiment with implementation under the supervision of a competent regulator.
  • The full license (Class F – full, “production environment”) allows to fully operate a Fintech business in accordance with a business plan and according to the approved classes of activities.

Companies who are looking for a world class jurisdiction with a forward-thinking government that welcomes entrepreneurs who have an idea they are required to demonstrate on a country-wide scale can find in Bermuda the jurisdiction that can make that idea a business reality

From Alpha to Beta to Production, Bermuda is set to provide the necessary innovative platform and benchmark that can support the next generation of unicorn global companies. Many parts of the world are still grappling with how to regulate and manage risk with fast-transforming assets.

Indeed digital assets, although relatively new, are gaining global traction. With the Government of Bermuda’s flexible and collaborative approach, the jurisdiction has led the way by lowering barriers to innovation, fostering a diverse business community, and supporting digital asset businesses to thrive.

The Currency Standard Initiative

The introduction of the Currency Standard Initiative (CSI) enables the development of standardised and harmonised rules for the private issuance and the distribution of digital value across interoperable systems. It could boost growth not only in Bermuda but across the globe, supporting the renaissance of financial services, improving cross border trade and opening up new market opportunities.

“CSI is an important instrument that can change the way institutions and global stakeholders interact. Imagine the removal of silos: that would significantly enable better coordination between policy makers, business leaders, regulators and innovators working together to bring not only profitable returns but sustainable and impactful value that is changing people’s lives.

“At Global Policy House, we care about people and we want them to have access to this next generation of value and wealth which can complement what we have today. Mitigating risk is vital but what is unquestionable is the digital revolution bringing a new kind of value that provides opportunity to so many cut out before.

“Bermuda is leading the way by providing the way to safely build wealth that trickles down across whole communities. What could be more exciting?” Michelle Chivunga, CEO, Global Policy House

With the current regime regulating digital assets, Bermuda is at the cutting edge of an emerging, disruptive technology. It is providing for itself the opportunity to create jobs, build an ecosystem that is best in class, generate incremental revenue, and leave for future generations a world that is innovative, customer-focused, and sustainable.

Companies who are looking for a world class jurisdiction with a forward-thinking government that welcomes entrepreneurs who have an idea they are required to demonstrate on a country-wide scale can find in Bermuda the jurisdiction that can make that idea a business reality.

One can find accelerators and incubators anywhere in the world, from London to New York to Singapore, but there’s only one place where the entire place is itself is an innovation campus; and that is Bermuda. Bring your business to the Island, innovate securely and feel the magic of Bermuda.


1. VUCA stands for volatility, uncertainty, complexity, and ambiguity.

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