Bermuda leads the way on digital transformation

This article first appeared in the Bermuda Business Review 2025-2026 in June 2025.

The global demand for improved and increased digital infrastructure capacity, resilience, speed and reliability continues to accelerate and with that comes the need for collaboration and trust between the legislature, regulators and industry to ensure entrepreneurial vision and investment can flourish. We are, as a species, at a pivotal point in our history as advanced technology, including artificial intelligence (AI) and blockchain, is revolutionising the way we engage, communicate and conduct business. To adapt to these modern-day challenges successfully, Bermuda has sought to maintain a healthy balance between the freedom to innovate and the need to protect through legal and regulatory constructs. If implemented well, appropriate law and regulation can provide certainty to innovators and investors and contribute towards their success.

With innovation comes risk and Bermuda's position as the world's risk capital has made it uniquely well placed to establish an environment that recognises this and has the expertise to help foster a growth mentality.  Bermuda has used decades of globally recognised legal and regulatory risk management experience to introduce some of the most advanced laws and regulations designed to encourage innovation in the information and communication technology (ICT) sector, which is a necessary foundation for the development of digital finance.

Through collaboration between Government, the regulators (including the Bermuda Monetary Authority (BMA) as the financial regulator and the Regulatory Authority (RA) as the utilities regulator) and industry stakeholders − including industry groups and interested organisations like Bermuda's Business Development Agency (BDA) − Bermuda has created an economic and regulatory ecosystem that promotes investment in projects that benefit from effective regulatory implementation and oversight that is proportionate to applicable risks.  The result being sustainable and equitable economic growth, diversity and prosperity.

Bermuda’s Digital Asset Business Act 2018 (DABA) and Digital Asset Issuance Act 2020 (DAIA) govern the conduct of digital asset businesses and token issuances in and from Bermuda and have for the last seven years provided the legal certainty and regulatory clarity for digital asset businesses to thrive without fear of disproportionate or uncertain regulatory and legal oversight and interference.

DABA and DAIA were designed to combat the risk of fraud, money laundering and terrorist financing through the provision of digital asset products and services, as well as to ensure business resilience to negative market forces and black swan events. Together they cover the full breadth and depth of products and services available in the sector, making them one of the most comprehensive digital asset business regimes in the world. A key component of the approach taken by Bermuda is that the DABA and DAIA are sector specific and expressly carve out digital asset business products and services, including all types of digital assets, from the existing traditional financial regulatory regimes. This is done by identifying the regulatory principles and standards as are applied to traditional finance and applying them to the activities conducted by digital asset businesses, taking into account the unique and novel attributes of the technology itself.

DABA is also capable of promoting innovation through the availability of different classes of licence. A Class T licence allows a person to 'test' their proposed products, services or platform with the level of regulatory requirements proportionate to the nature, scale and risk of their business. A Class M licence is a 'sandbox' that allows a tested project to scale from start-up to a mature professional services company. A Class F licence is a full licence and is available to those businesses that have already tested and scaled their projects and are now looking to operate at the highest levels of professional corporate conduct and risk management. By treating digital asset businesses as financially regulated institutions, Bermuda has created an environment that attracts institutional grade investment and participation whilst also building the necessary trust between the existing financial sector participants and the new digital asset players.

Bermuda's digital asset regulatory 'sandbox' was so successful that the concept was broadened and introduced to all regulated sectors. These 'sandbox' regimes encourage innovation within regulatory boundaries and provide an environment for the refinement and evolution of digital technologies and infrastructure systems.

Recognising that the digital economy needs advanced physical infrastructure, the Bermuda Government has also introduced several initiatives to ensure Bermuda can provide and benefit from the appropriate legal and regulatory environment to attract investment in subsea cabling, satellite and renewable energy projects. The Submarine Communications Cables Act 2020 (SCCA) is just one example, which was rewarded by Google's decision to establish a major cable landing station in Bermuda that would form part of its new trans-Atlantic subsea cable network and a major piece in Google’s global mesh network project. Google’s design has been recognised as the new standard for fibre-optic cable infrastructure and will form the foundation for future growth in the digital economy by ensuring improved resilience and speed for digital connectivity and communications as well as meeting the increasing demand for capacity.

The SCCA provides protection for both the ocean environment and the subsea cables themselves, as well as providing critical certainty about where and how companies can implement a cable landing project. This additional infrastructure has given Bermuda reputational capital in its commitment to developing a technologically attractive environment for both physical and digital infrastructure projects.

Bermuda's Government, regulators and industry working groups have not stopped, with more localised projects constantly being developed. Working groups have been established to consider and make recommendations for innovative new laws designed to recognise complex legal concepts like decentralised autonomous organisations and applying established concepts to new challenges like the implementation of digital ID. Other projects include the development of legal structures to meet regulatory criteria around digital asset custody and the principles of tokenisation.

Bermuda has already illustrated how its approach to innovation and technology can drive improvements in efficiency, promote problem solving and increase participatory value and experience through greater system resiliency and risk management, which − with smarter oversight and automated checks and balances − can result in a reduction in human error.

The Bermuda Monetary Authority (BMA) has also sought to push the boundaries of regulatory capabilities by establishing innovative projects that consider the future of regulation in a digital and potentially autonomous financial world. In 2025 they invited applications for decentralised finance projects to participate in the development and testing of embedded regulation which could provide instantaneous and constant regulatory oversight and transparency in projects that are designed to be autonomous from any form of central control. 

With such a positive approach, it is no surprise that Bermuda has also attracted international business to its shores through the quality of conferences hosted on Island. The latest being the Bermuda Digital Finance Forum (BDFF), hosted by SALT, DAIS and Penrose in May 2025 and which provided the opportunity for thought leaders, innovators, the Bermuda Government and regulators in digital finance to gather on Island to examine, discuss and even test digital financial applications through live activations. These included a USDC airdrop to every attendee by the conference organisers, use of self-custodial wallet infrastructure and a live local vendor market where everything could be purchased using USDC received in the airdrop. These activations were aimed at giving attendees real experience in use case examples of digital finance and will help promote the development of new and innovative digital solutions that could reduce friction, increase trust and deliver on improved user experience.

For anyone who has attended a digital finance or digital asset business conference in Bermuda, it won’t come as a surprise to learn that distributed ledger technology (DLT) and artificial intelligence (AI) are just two examples of digital technologies that are already being tested, recognised and deployed in Bermuda by both technology and traditional financial service companies.

Other projects include the development of innovative web3 products and services linked to insurance pools that focus on addressing the challenges of pricing and appropriate insurance products for the digital asset sector, as well as the integration of stablecoins, with the stability and efficiency of regulated service providers, into digital asset payment and custody solutions. It has also been announced that the Bermuda Government is actively supporting the development of digital finance infrastructure projects that will provide Bermuda residents and businesses with the ability to pay for public services and government fees using approved stablecoins.

Whilst these collaborative projects involving both the public and private sectors inspire much excitement for the digital landscape ahead, they will still face new challenges as they grapple with the granular details typical of build and implementation projects. With the benefit of the infrastructure and environment afforded by Bermuda's innovative legal and regulatory regimes, those who choose Bermuda as their home for innovation will no doubt see faster and more resilient solutions to these challenges.