Bermuda: nurturing digital development

An original version of this article was first published in the 2026-27 edition of Bermuda Business Review, July 2026.

Advanced technologies, such as blockchain and AI, are revolutionising the means by which we engage, communicate and conduct business. Accordingly, Bermuda is continuing to adapt to these rapidly evolving challenges by balancing between nurturing innovation whilst providing protection through legal and regulatory constructs. In striking the right balance, both innovators and investors will benefit from the certainty that appropriate law and regulation provide.

Of course, innovation does come with some risk and Bermuda's risk expertise and role as the world's risk capital, positions it perfectly to address future challenges. Bermuda has drawn upon 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 and underpin the development of digital finance.

Collaboration between the Government of Bermuda, the Bermuda Monetary Authority (BMA), the Regulatory Authority (RA), Bermuda Business Development Agency (BDA) and other industry stakeholders, supports an economic and regulatory ecosystem that promotes investment in projects that benefit from effective regulatory implementation and oversight proportionate to applicable risks, delivering diversity, sustainability and equitable economic growth.

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 eight years provided the legal certainty and regulatory clarity for digital asset businesses to flourish without the danger of disproportionate or retrospective 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, whilst ensuring business resilience to negative market forces and black swan events. They serve to cover the full range of products and services available in the sector, collectively making them the world's most comprehensive digital asset business regulatory regime.

An essential 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. Through identification of the regulatory principles and standards applied to traditional finance and applying them to digital asset business activities and accounting for the particular attributes of the tech itself, the jurisdiction treats digital asset business like other regulated financial sectors, allowing for a harmonised approach across financial sectors and mitigates against regulatory arbitrage and uncertainty.

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 and the new digital asset businesses being established. The Island'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.

The Government of Bermuda – recognising the digital economy requires advanced physical infrastructure – 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 fibreoptic 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, such as decentralised autonomous organisations and applying established concepts to new challenges, including the implementation of digital ID and the consideration of policy and regulation around AI. Other projects include the development of legal structures to meet regulatory criteria around digital asset custody and the principles of tokenisation, including Bermuda's unique segregated account companies and incorporated segregated account companies that provide for statutory segregation and protection of assets. Used extensively in the (re)insurance and funds sectors, these structures are now becoming the standard for digital asset businesses involving client assets.

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 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. The first annual report from this initiative is due to be published in June 2026. However, its success has already been evidenced through at least one project having already secured a Class T licence within the first year.

With such a positive approach, it is no surprise that Bermuda has also attracted international business to its shores through the quality of conferences held on Island. The Digital Finance Forum (DFF), hosted by SALT and Penrose in May 2026, provided the opportunity for some of the world's leading digital asset companies (including Circle, Coinbase and Stellar), thought leaders, innovators, the Government of Bermuda and regulators of digital finance, to gather on Island to examine, discuss and even test digital financial applications through live activations. These included the free distribution of USDC to every attendee by the conference organisers by way of an airdrop and use of near field communication cards ("NFC"), use of self-custodial wallet infrastructure and a live local vendor market where everything could be purchased using USDC received in the airdrop/NFC distribution.

These activations were aimed at giving attendees real experience in use case examples of digital finance and to help promote the development of new and innovative digital solutions that 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 will not come as a surprise to learn that distributed ledger technology (DLT) and AI are just two examples of digital technologies that are already being tested, recognised and deployed in Bermuda across several sectors, including traditional financial service companies and the health care system.

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.

The most significant announcement this year came at the World Economic Forum in Davos where the Premier, the Hon. David E. Burt, JP, MP, announced the Government of Bermuda's objective to establish Bermuda as the world's first fully on-chain national economy. In partnering with Coinbase and Circle, the Bermuda Government will have access to infrastructure and training that will allow Government agencies to pilot the acceptance and use of stablecoins and lay the foundation 'for a more inclusive, competitive and resilient national economy'. In addition, the Government also announced its initiative to upload publicly available Bermuda government data to Filecoin, the world's largest decentralised storage network, as part of its commitment to strengthen the resilience, integrity and transparency of such data.

These announcements were shortly followed with confirmation by the Premier that Cabinet had approved a framework that allows the Government to accept and invest in digital assets within a clear regulatory structure. The Premier also went on to announce that Bermuda's existing Fintech Development Fund was to be modernised to receive digital asset contributions from industry which will in turn be used to support and strengthen the growth of Bermuda's on-chain economy and digital finance ecosystem.

The tangible progress that has been made in Bermuda within the last 12 months towards implementation and adoption
of a digital infrastructure framework, without compromising the safety, security and credibility of the regulatory regime, cannot be ignored.

The foundation for this was established in 2018 through the adoption of DABA that sought to protect and attract credible digital asset organisations to Bermuda. This has continued for almost a decade with ongoing commitments to legal, regulatory and digital pilots and experimentation across all sectors and at all levels of the ecosystem and economy.

This solid and unwavering commitment and proactive determination to become a leader in the world of digital finance might seem at odds with Bermuda's motto Quo Fata Ferunt (Wither the Fates carry us) but it very much aligns with how Bermuda has, for over 400 years, succeeded in punching way above its weight on the international stage.