The latest Bermuda Monetary Authority update, released earlier this month, brings changes to the digital asset business regulations.

“The BMA’s new cyber-risk annual return will allow Class F DABs to file within four months of their financial year end, unlike Class M (restricted form of license intended as a regulatory sandbox) and Class T DABs (for DABs carrying out beta testing). The Class F licence permits full operation as a regulated DAB in Bermuda.”

The BMA has also published the Digital Asset Business (Custody of Client Assets) Rules 2024 (Rules) for DABs that hold any client assets, whether fiat or digital. The aim is to provide more clarity and guidance on their custody obligations.

The rules cover segregation, fiduciary duty, pooling events, delegation and accounting, and they supplement the existing cyber-risk requirements for digital asset custodial wallet providers.

The DAB (Cyber Risk) Rules 2023 became operative on January 1.

Also in January, the BMA released the DAB Operational Cyber Risk Management Code of Practice, in its final form. It specifies the cyber-risk management obligations for licensed DABs and is now operational.

The revised DAB Business Custody Code of Practice (2024) which specifies the asset safekeeping obligations of digital asset business custodial wallet service providers was also released in February, in its final form, and is now effective.