The Digital Asset Business Amendment Act 2019 (the "DABA Amendment Act") was approved by the Bermuda Parliament on 2 October 2019 and, once operative, will bring eagerly awaited amendments to the existing licensing framework for digital assets businesses in Bermuda.
The DABA Amendment extends the scope of digital asset business activities that are captured under the Digital Assets Business Act, 2018 ("DABA") and which require a licence from the BMA to conduct such activities in Bermuda.
The key amendments to DABA under the DABA Amendment Act include: » regulation of persons who operate a 'digital asset derivative exchange' and provide the services of (a) creating, selling or otherwise entering into digital asset derivatives contracts; and (b) clearing and settlement of digital asset derivatives. 'Digital asset derivatives' include contract for differences, options, swaps and futures contracts, based on a digital assets underlying interest; » regulation of persons acting as 'digital asset benchmark administrators' being a person that has control over the provision of a 'digital asset benchmark', which includes any rate, index or figure made available to the public or published that is periodically or regularly determined by the application of a formula to, or on the basis of the value of one or more underlying assets or prices, by reference to which the amount payable under a digital asset or the value of a digital asset is determined; » regulation of 'digital asset trust service providers' which are persons acting as fiduciary, agent or trustee on behalf of another person for the purpose of administration and management of a digital asset, subject to certain exceptions, including where a qualified custodian has been appointed in respect of the digital assets; » clarity in respect of what marketing making activities fall into scope, with the definition of market maker now covering (a) quoting buy and sell prices in furtherance of profit or gain on the bid offer spread; (b) fulfilling orders initiated by clients or in response to clients' requests to trade; or (c) hedging positions.
In bringing forth these amendments, Bermuda is once again positioning itself as a jurisdiction in which to conduct all manner of digital assets business activities and meeting industry demand for a well-regulated jurisdiction in which to offer financial products with digital assets underlying interests, which provides protection for consumers while fostering further innovation.
Any person who is already conducting such digital asset business activities that are now captured by the DABA Amendment have a two months' transitional period in order to make an application to the BMA for a digital assets business licence.
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