Consultation Paper - Digital Asset Business Amendment Act 2020 (2020-08-07)

Summary

This is a Bermuda Monetary Authority consultation paper seeking industry feedback on a draft Digital Asset Business Amendment Act 2020, which would amend the Digital Asset Business Act 2018 (DABA). It sets out proposed changes to definitions, exemption procedures, fee powers, and licensing classes for digital asset business (DAB), and attaches the draft Bill and explanatory memorandum.

• New Class T licence: Introduces a limited-duration test licence (3 to 12 months, extendable) for piloting or beta testing digital asset business activities, with reduced minimum net assets of $10,000, a $1,000 application and annual fee, no insurance requirement, no requirement to display the licence or maintain a Bermuda office, and a requirement to publish a statement on the licensee's website disclosing its Class T status for the duration of the licence.
• Definition changes: Repeals and replaces the definitions of digital asset exchange and digital asset derivative exchange, and changes digital asset services vendor from an exhaustive to an inclusive definition.
• Exemption notifications: Would require persons seeking a section 11 exemption order to file an application and re-notify the Authority annually that they continue to qualify; deletes section 11(5)(a).
• Fee flexibility: Expands the Authority's power under section 16 to exempt or reduce fees (including for undertakings holding multiple licences across sectors), subject to conditions and a nature/scale/complexity test.
• Certificates of Compliance: Where a licence expires before financial year-end, the company would need to submit its certificate of compliance within 30 days of licence expiration.
• Consequential DAIA amendment: Adds a new prudential/other returns category for accreditation of digital asset business under section 7(1)(g).

As a consultation paper, none of these changes are yet in force; they represent proposals on which the Authority is inviting comment before finalising the Bill. Stakeholders should review the draft Bill and explanatory memorandum and submit feedback via the survey link provided.

Key obligations

• Interested persons and digital asset industry stakeholders must submit comments on the consultation proposals via the survey link no later than 07 September 2020
• If enacted, Class T licensees would be required to publish a website statement disclosing their Class T licence status for the duration of the licence
• If enacted, persons holding a section 11 exemption order would be required to file an application for exemption and re-notify the Authority annually that they continue to qualify
• If enacted, a licensee whose licence expires before its financial year-end would be required to submit its Certificate of Compliance within 30 days of licence expiration

Applies to

digital asset business licensees, digital asset exchanges, digital asset derivative exchanges, digital asset services vendors, banks, trust companies, investment businesses, insurance companies

Deadlines

• 07 September 2020: Deadline for industry and interested persons to submit comments on the consultation proposals via the survey link

Related documents

• This document amends Bermuda Monetary Authority Act 1969
• This document amends Digital Asset Business Act 2018