Sep 10, 2026
Key takeaways
Decentralised finance (DeFi) describes financial services such as trading, lending, derivatives and payments that are executed through smart contracts on blockchain infrastructure, rather than through traditional intermediaries.
At the organisational level, many DeFi protocols are governed by decentralised autonomous organisations (DAOs), where token holders participate in decision-making and smart contracts automate key functions. Because a DAO is not, by itself, a conventional legal person, projects often establish a legal structure for a DAO by using a foundation company or a company limited by guarantee (FC) as a DAO legal wrapper, providing a formal interface for contracting, governance, administration and regulatory engagement. The FC itself does not typically obtain a digital asset licence; rather, a separate Bermuda operating entity (often a subsidiary of the FC) is established to conduct regulated activities under DABA. This structure allows the DAO’s decentralised governance to sit at one level, while specific regulated activities such as operating an exchange, providing custody or facilitating digital asset lending are conducted through a separately licensed and accountable Bermuda entity, subject to full regulatory oversight by the BMA.
It is within this layered structure that Bermuda’s framework becomes relevant. Through the Digital Asset Business Act 2018 (DABA), Bermuda offers a purpose-built regulatory regime for digital asset business, including exchanges, derivative exchange platforms, custody, token issuance and digital asset lending. For DeFi projects, and for other Web3 businesses such as blockchain infrastructure projects, cross-chain interoperability protocols, real-world asset tokenisation platforms and decentralised AI or compute networks, the combination of a DAO governance model, an FC legal wrapper and DABA regulation can provide both structural flexibility and regulatory clarity.
As tokenisation of funds, securities and other real-world assets continues to accelerate, institutional participants are increasingly seeking regulated environments in which these activities can operate.
The next phase of DeFi and digital asset adoption, including the growth of tokenised assets, will be shaped less by technological capability than by institutional confidence. Asset managers, hedge funds, banks and other sophisticated market participants increasingly recognise the efficiencies that decentralised infrastructure can offer, but their ability to participate at scale is constrained by a familiar set of concerns:
• regulatory uncertainty
• smart contract and operational risk
• counterparty, governance and accountability concerns
Institutional investors, asset managers and other regulated financial institutions increasingly require governance, accountability and regulatory certainty before deploying capital into DeFi ecosystems.
DAO and FC structures help address part of this challenge by pairing decentralised financial infrastructure with a recognisable governance and legal interface. However, legal structuring alone is not the same as regulatory acceptance. For institutional users, the decisive question is whether a DeFi platform can demonstrate not only that it has a coherent legal form, but that it operates within a supervisory framework capable of supporting governance, risk management and accountability at institutional standard.
Bermuda is well positioned to bridge the gap between DeFi innovation and institutional adoption because it offers a credible framework for regulated decentralised finance, bringing together three elements that are often considered separately: a dedicated digital asset framework, a mature financial services ecosystem, and a regulator with international credibility. Through DABA, Bermuda has chosen to regulate digital asset business activities carried on in or from within Bermuda through a purpose-built statutory regime, rather than simply adapting legacy financial services rules to a new technology.
That statutory clarity is reinforced by Bermuda’s long-standing position as a global reinsurance and financial services centre, where governance, risk management and compliance are already central to the regulatory culture. It is also strengthened by the international standing of the Bermuda Monetary Authority (the BMA), reflected in Bermuda being one of only two jurisdictions granted full Solvency II equivalence by the European Union and recognised by the US National Association of Insurance Commissioners as both a qualified and reciprocal jurisdiction. For DeFi platforms seeking to move from early-stage development to institutional participation, this combination of innovation, regulatory substance and market credibility is what makes Bermuda a compelling bridge for cross-border digital asset activities.
One of the most compelling features of Bermuda’s digital asset regime is the way in which its licensing architecture reflects the commercial reality of DeFi development. Rather than requiring emerging projects to fit immediately within a full-scale regulatory model, Bermuda offers a staged pathway that recognises the different levels of operational maturity, governance, and risk management that exist across the lifecycle of a digital asset business.
Under the DABA regime, supervised by the BMA businesses may seek one of three licence classes, each designed to meet a project at a different stage of its evolution:
• Class T licences provide a supervised environment for testing, validation, and proof-of-concept deployment
• Class M licences support businesses that are moving beyond experimentation and beginning to scale their operations on a transitional basis
• Class F licences provide full authorisation for mature businesses operating at an institutional standard
For DeFi platforms and other digital asset projects, whether commercialising a DAO or seeking to scale Web3 infrastructure more broadly, this tiered approach is strategically significant. It enables projects to move from innovation and market testing to institutional-grade regulatory status within a single jurisdiction, while giving investors, counterparties, and institutional participants greater confidence that regulatory expectations can mature alongside the business.
Walkers’ work in advising the first DAO-governed DeFi platform to obtain a DABA licence was more than a transactional milestone; it was a practical demonstration that decentralised governance can be brought within a credible regulatory perimeter, whilst preserving the DAO’s broader governance role. The licensing of a Bermuda operating entity within a DAO-governed structure by the BMA showed that decentralised governance and institutional-grade regulation can coexist, provided the structure is designed with appropriate legal, governance and operational interfaces. Walkers worked closely with management and the BMA to implement a governance structure that respected the voting outcomes of token holders' proposals while preserving independent board oversight and responsibility.
That outcome represents an important proof point for the next phase of DeFi and for other Web3 projects seeking to combine decentralised governance with regulated commercial activity. It demonstrates that decentralisation and regulation need not be opposing concepts, and that a properly structured DAO-governed platform can provide institutional users with both the benefits of decentralised infrastructure and the confidence of formal regulatory approval. In doing so, it offers a practical model for how compliant DeFi infrastructure can evolve across a range of use cases.
For DeFi to achieve meaningful institutional adoption, innovation must be matched by legal certainty, credible supervision and structures that can support real-world commercial activity. Bermuda offers that next layer of development: a regulated environment in which institutional DeFi can operate, scale and engage with established market participants without losing the flexibility that makes decentralised infrastructure compelling.
For organisations building, investing in or exploring DeFi, and for teams developing other areas of the Web3 ecosystem, the question is no longer whether decentralised models can be structured; it is whether they can be commercialised within a framework that institutions can trust. Bermuda’s combination of purpose-built legislation, internationally respected regulation and a staged licensing pathway positions it as a leading jurisdiction for digital asset businesses, capable of turning decentralised projects from experimental models into institutional-grade commercial infrastructure.
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