- Bermuda is well-positioned to become a premier destination for crypto startups and blockchain companies amid the crypto regulatory war.
- Bermuda has licensed companies like Block and Circle since it established a digital asset framework in 2018.
- The regulatory crackdown on crypto has U.S. firms like Coinbase eyeing crypto-friendly regions like Bermuda and Hong Kong.
Bermuda is rapidly emerging as a premier destination for crypto startups seeking a favorable regulatory environment and low-tax regime. A series of recent developments, including the licensing of Coinbase by Bermuda’s financial regulator and the establishment of a dedicated blockchain task force, have reinforced the island’s position as a hub for digital asset innovation.
Bermuda’s calm waters lure US crypto firms away from regulatory turmoil
As the regulatory climate in the United States deteriorates, American crypto companies are eying Bermuda and its more accommodating digital asset framework.
It is not uncommon for crypto firms to relocate offshore to take advantage of more transparent digital asset laws. FTX’s exchange was headquartered in the Bahamas, for instance.
The renewed interest in crypto frameworks outside the United States is a result of the country’s key regulators cracking down on crypto firms and Congress moving cautiously to establish new regulations for the industry. In recent months, the Securities and Exchange Commission has targeted cryptocurrency companies such as Coinbase, Kraken, Bittrex, and Genesis with enforcement actions, settlements, and investigations.
Bermuda’s Regulatory Framework
Bermuda’s regulatory framework for crypto is among the most progressive in the world. In 2018, the country introduced the Digital Asset Business Act (DABA), which established a comprehensive regulatory framework for digital assets, including cryptocurrencies.
Under DABA, digital asset businesses are required to register with the Bermuda Monetary Authority (BMA) and comply with strict anti-money laundering (AML) and know-your-customer (KYC) requirements.
In addition to DABA, the Bermuda government has established a dedicated fintech office known as the Bermuda Business Development Agency (BDA), which promotes the country as a hub for fintech and blockchain startups. The BDA also provides regulatory guidance to businesses seeking to establish operations in Bermuda.
One of the most significant recent developments in Bermuda’s crypto ecosystem was the licensing of Coinbase by the BMA. In April 2023, Coinbase announced that it had secured a Digital Asset Business License from the BMA, allowing it to offer cryptocurrency trading and custody services to Bermuda residents and businesses.
The licensing of Coinbase is a major coup for Bermuda, as Coinbase is one of the world’s largest and most respected crypto exchanges. By attracting a company of Coinbase’s stature, Bermuda has demonstrated that it is serious about becoming a hub for digital asset innovation.
The move to the British Island territory also comes as Coinbase and the SEC prepare for a legal battle. The commission recently notified Coinbase via a Wells Notice, a document that can precede an enforcement action, that it is the subject of an investigation. The CEO of Coinbase, Brian Armstrong, warned the SEC that he is prepared to defend his company in court.
Bermuda’s Blockchain Task Force
In addition to its favorable regulatory environment, the country has established a dedicated blockchain task force to promote the adoption of blockchain technology across various industries. The task force comprises representatives from government, industry, and academia and is focused on promoting innovation and collaboration in the blockchain space.
The task force has already made significant progress, including the launch of a blockchain pilot program in the healthcare sector. The pilot, which is being run in partnership with major global pharmaceutical companies, aims to improve the efficiency and security of the drug supply chain by using blockchain technology to track and verify the authenticity of pharmaceutical products.
With its favorable regulatory environment, low-tax regime, and commitment to blockchain innovation, the British Island territory is well-positioned to become a premier destination for crypto startups and blockchain companies. The country’s progressive regulatory framework, combined with its world-class infrastructure and skilled workforce, make it an attractive location for businesses seeking to establish operations in the crypto space.
As the global crypto ecosystem continues to evolve, the country is likely to play an increasingly important role. With its forward-thinking approach to regulation and innovation, the island is poised to become a major center for digital asset innovation, attracting businesses and entrepreneurs from around the world.