Bermuda Proposes to Regulate ICOs

A strict regulatory framework seeks to attract crypto businesses to Bermuda.

by Kalina Tekelieva
16 April • 3 min
In News

The Bermuda government proposed on Friday to regulate initial coin offerings (ICOs) in a bid to diversify the economy of the island country.

Under the tabled Companies and Limited Liability Company (Initial Coin Offering) Act, ICOs will be treated as a “restricted business activity” requiring consent from the Minister of Finance. The new legislation will pave the way for firms in the digital currency sector to raise capital through the issuing of new tokens and will thus generate government revenues, Minister of National Security Wayne Caines said in a statement. However, he did not go into details about how exactly the revenues will be generated.

Bermuda, a self-governing British offshore territory, has a public debt of USD 2.57 billion as of March 2018, according to the latest government budget statement.

Rules on the crypto market

A day before proposing the new ICO rules, Caines hosted an information session for the local business community. There he maintained that stringent regulations will not deter the cryptocurrency industry, but will rather attract businesses to the Bermuda islands, local news outlet Royal Gazette reported on Thursday.

ico_body

The presence of a legislative framework means legal certainty for businesses dealing with digital assets, Lydia Dickens, who leads the government’s business development unit, was quoted as saying. “[People] just want to be sure they can conduct this activity and not go to jail,” according to Dickens.

John Narraway, member of the government work group on blockchain business development, supported Dickens’ position and said that crypto businesses are looking for regulatory certainty, and not tax advantages, Royal Gazette wrote.

Upcoming steps in regulation

What will come next in the Bermuda government’s call for crypto regulation is a virtual currency business act that will propose to govern digital asset exchanges, Caines said in the statement from Friday.  He didn’t specify when the bill will be discussed, but Royal Gazette wrote this will happen in May.


exchange_body

The news outlet cited Caines as saying that Bermuda will probably present fintech-related regulation “every month or so”. More details on the upcoming proposal of a virtual currency business act can be found in a consultation paper published by the Bermuda Monetary Authority (BMA).

Bermuda’s place in the crypto world

In its attempt to go beyond the offshore sector and become a global leader in blockchain, Bermuda faces the competition of Singapore, Switzerland, Gibraltar, the British Virgin Islands and the Cayman Islands, according to Chris Garrod, part of a government blockchain work group. As of now, the Cayman Islands are progressing the most, Garrod was quoted by Royal Gazette on April 9.

In turn, Caines claimed at the information session on Thursday that a considerable number of crypto-engaged people want to go to Bermuda. “We’re going to London at the weekend and we have 20 companies lined up to meet us. It’s actually phenomenal,” according to Caines.