Bermuda’s legislation governing digital asset businesses is to be amended to provide for a new class and to enhance the Bermuda Monetary Authority’s oversight of service providers.

The Digital Asset Business Amendment Act 2023 has had a first reading in the House of Assembly.

The amending legislation adds the new digital asset business activities of digital asset lending, or digital asset repurchase transactions, service provider as activities for which the BMA may grant a license under the Digital Asset Business Act 2018.

It also sets out definitions of the new digital asset business activities.

The amending legislation clarifies that the BMA’s supervisory powers include the power to impose and vary conditions on the grant of a license.

It also provides that the BMA may make rules in relation to cyber-risk, instead of cybersecurity, as is currently the case.

In addition, the amending legislation imposes an obligation on senior representatives of a licensed undertaking which has been exempted from licensing requirements under the Investment Business Act 2003 due to carrying on investment business in an ancillary manner to its digital asset business, to submit a report to the BMA where the licensed undertaking ceases to carry on such business in an ancillary manner.

It also imposes an obligation on a Class T licensee to maintain a record of both its client and its own transactions at its principal place of business for a period of not less than five years beginning from the date the transaction occurred.

The amending legislation and its schedule also effect consequential amendments to the fourth schedule to the Bermuda Monetary Authority Act 1969 to introduce new fee payments in respect of the new licensing class.