Bermuda, an archipelago of the North Atlantic Ocean, is moving fast to become a hub for cryptocurrency exchanges and companies. With a well-known offshore insurance and reinsurance industry, this island nation flaunts transparency in digital asset regulation to attract more crypto projects and players. Bermuda has worked to set the rules of the road for financial innovators. In 2018, it became one of the first jurisdictions to introduce a regulatory framework for initial coin offerings (ICOs). The Bermuda Monetary Authority (BMA) requires companies to obtain a license before launching a token sale. BMA also issued guidelines for digital asset custodians and virtual currency exchanges, outlining the requirements for companies in this sector.
In 2020, Bermuda further strengthened its commitment to crypto by passing the Digital Asset Business Act. It requires all digital asset businesses operating in Bermuda to register with BMA and comply with strict anti-money laundering and anti-terrorism financing laws. Bermuda’s endeavors have not gone unnoticed by the crypto industry, as the island nation has attracted several well-known crypto ventures, including Circle and Binance, among others.
Last week, as part of its plans to expand internationally, Coinbase was granted a license to provide services in Bermuda. The Bermuda Monetary Authority (BMA) granted the US cryptocurrency exchange a Class F license, which allows it to operate as a digital asset exchange in Bermuda. Prime Minister David Burt has publicly praised the licensing. He stated in an April 19 tweet, “I’m excited to see our island leading the ‘race to the top’ for regulation in this industry.”
Regulatory uncertainty within the country remains the main reason why some companies choose Bermuda. Lately, crypto exchanges and companies have left the US for jurisdictions that regulate cryptocurrencies in a friendlier way. Another player that could follow suit is Ripple. Currently, the fintech firm remains locked in a legal battle with the US Securities and Exchange Commission (SEC), with a decision potentially coming any day. CEO Brad Garlinghouse warned in July 2022 that the company would move to another country if it lost its battle with the SEC. Meanwhile, crypto lending startup BlockFi and crypto exchange Bittrex Inc. all operate in Bermuda.
Bermuda’s push to become a crypto hub comes as the industry faces turmoil. The value of Bitcoin, the largest cryptocurrency by market capitalization, has been subject to severe volatility in recent months. However, Bermuda’s regulatory framework helped it weather the storm by setting clear guidelines for digital asset businesses. BMA provides certainty and stability that may be lacking in other jurisdictions, attracting crypto companies seeking a stable regulatory environment, especially as officials in other countries take a more cautious approach to the industry.
“We are aware of the recent devaluation of cryptocurrency prices and remain confident that it does not threaten the island’s ability to become a crypto hub,” said Jason Hayward, Bermuda’s minister of economy and labor. “This industry downturn is likely to further our goals and positively impact our long-term growth and role in the sector.”
Additionally, the region is one of the few jurisdictions worldwide that has put in place a comprehensive framework governing cryptocurrencies. Bermuda regulators say their understanding of international business, which accounts for about 27% of the island’s economy and a skilled local workforce, translates into the basis for developing a thriving digital asset industry.
Bermuda’s focus on transparency and regulation may also help him attract institutional investors, who are increasingly interested in the crypto industry. Leading institutional investors, including hedge funds and asset managers, have started investing in Bitcoin and other cryptocurrencies in recent years. By providing a clear regulatory framework, Bermuda can attract these investors and help drive them