Setting up a tokenised fund in Bermuda

Bermuda Partners Sarah Demerling and Natalie Neto outline the process of enacting and maintaining a tokenised fund in Bermuda. 

Imagine a world where asset management transactions and contracts are maintained in a decentralised form across different locations using distributed ledger technology (blockchain), all information securely and accurately stored using cryptography and accessed using keys and cryptographic signatures. This would allow subscriptions and redemptions to be processed by way of smart contracts and investor reporting being available in real time leading to greater transparency, better efficiencies and lower fees. These days, it feels that such a transformation is not so far away.

The Bermuda Government understands the power and disruptive potential of this technology and has identified an opportunity to be a pioneer in this space. Bermuda has leveraged its significant expertise in regulatory management under the supervisory oversight of the Bermuda Monetary Authority (BMA), Bermuda's sole financial services regulator and during 2018 introduced cutting edge digital asset business legislation 2018 (known as DABA) together with amendments to the Companies Act, 1981 and related token offering regulations to create a statutory framework for the regulation of token offerings and digital assets business activities in Bermuda.

This framework provides a unique environment that prioritises regulatory certainty, investor confidence and compliance with internal know your customer and anti-money laundering and anti-terrorist financing and sanctions compliance (AML/ATF) regulations. These benefits of certainty and stability are attracting the best structured fintech companies and funds which are becoming part of the Bermuda fintech ecosystem.

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Originally published by HFM Global