Bermuda’s Financial Regulator Issues Draft Code For Crypto Custody Regulation
The Bermuda Monetary Authority (BMA) has invited the public to give commentary feedback on its draft rules targeting digital asset custody.
Bermuda’s financial services regulator released the draft Code of Practice for Digital Asset Custody seeking consultations leading to measures that will ensure the client’s assets get the highest possible protection.
The BMA also said that the code would seek to clarify its expectations with regards to the critical sector of crypto custody, which covers technology as well business controls in critical areas like key generation, hot and cold storage, and incident reporting among others.
As per its statement, the public has until January 18, 2019, to submit their input on the matter.
BMA senior advisor Moad Fahmi noted that the agency’s Code of Practice for the custody of crypto assets will directly benefit Bermuda’s financial system.
“We view custody as an important part of a healthy digital asset ecosystem – one that will encourage quality players to contribute positively to our financial system.”
According to him, the framework will ensure financial regulations achieve their core objectives of consumer protection, providing the stability of financial institutions and safeguarding financial integrity of the markets.
The rules will also be essential in helping the country to focus on Anti-Money Laundering (AML) and Anti-Terrorism Financing (ATF) checks.
Bermuda eyes global leadership position
The BMA released the code as part of the country’s efforts to become a global leader in the regulation of digital assets.
As Craig Swan, the agency’s managing director (supervision) said, the framework is in line with “BMA’s 2018 Business Plan objectives” which are not only proactive but also quite comprehensive and forward-looking.
The island nation has also looked to attract many of the blockchain startups through amendments to the banking act.
The amendments were necessitated by the fact that most of the local financial institutions cited stringent regulations from financial regulators as the reason many refrained from advancing banking services to cryptocurrency-focused businesses and blockchain firms.
The country’s Prime Minister David Burt supported the amendments, at the time saying that the government was ready to spur growth within the crypto and distributed ledger technology (DLT) industries.
The country is also among the first to have recognized the need for a regulatory framework tailored to the ICO industry.
In March this year, Burt told parliament that Bermuda had a great opportunity of becoming “a global leader” within the Fintech industry. He noted that this was possible given that it was set to be “one of the first countries in the world to specifically regulate ICOs.”
He added that by having a regulatory framework in place, Bermuda would provide the legal certainty that would assure firms looking to launch initial coin offerings in the country.
The friendly environment provided by Bermuda saw leading crypto exchange Binance sign a Memorandum of Understanding (MOU) with the country.
The agreement included plans by the exchange to invest about $5 million in Bermuda-based blockchain startups.
Disclaimer: This is not investment advice. Cryptocurrencies are highly volatile assets and are very risky investments. Do your research and consult an investment professional before investing. Never invest more than you can afford to lose. Never borrow money to invest in cryptocurrencies.