In November 2025, the Bermuda Monetary Authority (the 'Authority') issued the Discussion Paper - Asset Tokenisation to identify regulatory or legislative gaps and hurdles in order to provide greater clarity in the market and to support the successful development of tokenisation in Bermuda.
On 30 March 2026, the Authority issued the Stakeholder Letter summarising the feedback received and outlining the Authority's proposed regulatory approach to asset tokenisation going forwards. We summarise the key outcomes signalled in the Stakeholder Letter in this advisory.
Licensing and Regulation
Bermuda's regulatory regimes governing tokenised funds and digital assets business that issue, sell and redeem tokens (such as tokenisation platforms) are currently clearly delineated. A digital assets business licensed under the Digital Asset Business Act 2018 (the 'DABA') is excluded from the definition of an 'investment fund' under the Investment Funds Act, 2006 (the 'IFA') which means tokenised funds do not require an additional digital assets license in Bermuda.
In the Stakeholder Letter, the Authority outlines proposals to bring further clarity to the funds and asset management sector including:
- harmonising the definitions of ‘qualified participants’ under section 9 of the IFA and ‘qualified acquirers’ under section 6 of the Digital Asset Issuance Act 2020 (DAIA), as part of a broader effort to establish unified investor qualification definitions across all relevant regulatory frameworks; and
- introducing an exemption where a licensee under the Fund Administration Provider Business Act 2019 intends to provide fund administration business services to tokenised funds, such licensees will be exempted from licensing requirements under DABA. Similarly, investment funds that have tokenised fund units will be exempted from requirements under the Digital Asset Issuance Act 2020.In addition to the above changes to the regulatory regimes, the Authority is proposing amendments to the IFA to allow a fund register to be tokenised and maintained on-chain, rather than continuing to require paper based share transfer instruments and physical registers. A path to recognise service providers that offer services solely in the context of tokenisation as having satisfied the principles that underpin traditional fund service provider appointment requirements is also proposed.
Currently, there is potential overlap between Bermuda's digital assets business regime (governing activities relating to digital assets) and Bermuda's investment business regime (governing activities relating to 'traditional assets') where an entity engaged in tokenised asset issuance, custody or intermediary businesses involving assets which could be caught under both regimes (such as tokenised stocks, debentures and real world assets). In particular, for entities licensed under the DABA that issue tokens representing ownership of shares, or that track the net asset value of a traditional underlying asset such as company shares, there is uncertainty over whether dual licensing under DABA or Investment Business Act 2003 (the 'IBA') is required. Whilst many operate with only one licence, in reliance on certain existing regulatory safe harbours and exemptions, regulatory clarity regarding the categorisation of a tokenised asset is welcomed.
The Stakeholder Letter addresses this by proposing overarching requirements to address the regulatory needs across all tokenisable asset classes. This activity-based regulatory approach is proposed to provide sufficient flexibility to accommodate innovation while maintaining appropriate safeguards regardless of the underlying asset being tokenised.
To address the overlap between regulatory regimes, the Authority proposes in the Stakeholder Letter to introduce a definition of ‘tokenised investments’ to the regulatory framework to clarify the regulatory treatment of tokenised assets that may be considered investments under the IBA, rather than (or potentially in addition to) being a digital asset derivative under DABA. In particular, the Authority is considering the following amendments to laws and regulations:
- issuing guidance as to when a token may be considered an investment under the IBA, particularly the 'investment' definition of ‘rights and interests in investments’ under the IBA or an investment fund under the IFA;
- introducing an exemption such that a DABA licensee can conduct investment business specific to tokenised investments, without requiring an IBA licence (expanding the current '25% safehour' exemption);
- introducing an exemption such an IBA licensee holding a standard IBA licence can engage solely in tokenised investments without requiring a DABA licence.
The Authority anticipates issuing requirements for functional roles in tokenisation, including issuers, those that facilitate access to or trade tokenised assets, and custodians. For custodians, the requirements will emphasise the importance of safeguarding both the tokens and, in the case of digital twins, the underlying real-world assets they represent.
The Stakeholder Letter goes on to emphasise that regulatory focus will be on expectations related to governance, custody and protection of customer assets, suitability and disclosure. The Stakeholder Letter refers to the clearly differentiating risk profiles between tokens that confer proprietary rights and those that provide only synthetic or economic exposure. The Authority intends to provide guidance to clarify supervisory expectations to ensure that requirements for ensuring customers understand the differing risks are applied in ways that reflect the specific features and risks of asset tokens.
Next Steps
If your business is likely to be impacted by the proposed changes to law, reach out to Bermuda's leading Fintech practice. We have extensive experience in conducting product analyses and advising on licensing obligations and regulatory and risk compliance programmes. Key contacts are listed below.
