Consultation Paper - Guidance Note on the Use of Recognised Stablecoins within Bermuda Insurance, ILS and Investment Fund Structures (2026-07-20)

Summary

This is a Bermuda Monetary Authority consultation paper seeking industry feedback on a proposed Guidance Note that would set out the Authority's supervisory expectations for the controlled use of 'recognised stablecoins' by certain Bermuda-regulated insurance, insurance-linked securities (ILS) and investment fund structures. The document is still in draft/consultation form and does not itself create new statutory obligations; it explains what the BMA would expect to see if it finalises the guidance.

The proposed guidance would apply to Limited Purpose Insurers (LPIs), Bermuda investment funds (including ILS funds), insurance managers, agents, brokers, insurance marketplace providers and other innovative intermediaries considered 'eligible entities'. Commercial insurers are explicitly out of scope, and existing Class IIGB and Class IILT innovative insurer frameworks (which already permit digital asset use) are unaffected. Traditional restricted/unrestricted Special Purpose Insurer collateral structures are expected to remain fiat-based, with any stablecoin proceeds converted to fiat before deployment as SPI collateral.

• Eligibility criteria: Proposes supervisory criteria for what counts as a 'recognised stablecoin' eligible for use.
• Use cases: Sets out proposed operational, treasury, settlement, liquidity, collateral and risk-transfer use cases for stablecoins.
• Governance and risk: Covers governance, risk management, service provider due diligence, custody/wallet controls and technology (blockchain, smart contract, oracle) risk expectations.
• AML/CFT and sanctions: Outlines expected AML/ATF, sanctions and financial crime controls for stablecoin arrangements.
• Valuation and disclosure: Addresses valuation, NAV/accounting treatment, disclosure, documentation and settlement finality expectations.
• Stress testing and liquidity: Expects stress testing for depeg, redemption suspension, custodian failure and related contingency planning.
• Supervisory engagement: Proposes a supervisory notification, approval and ongoing reporting process, supported by an indicative Annex 1 checklist for applications or business-plan changes.

The BMA is specifically seeking feedback on the eligibility criteria, scope of use cases, exposure limits, ILS fund treatment, AML/ATF and sanctions controls, custody and disclosure expectations, stress testing and concentration limits, cross-chain bridging restrictions, and the proposed supervisory notification process. Comments must be submitted to policy@bma.bm by 30 September 2026; the guidance is not yet in force.

Key obligations

• Interested parties wishing to respond must submit comments on the proposed Guidance Note to policy@bma.bm by 30 September 2026, ideally identifying the specific section or paragraph addressed.

Applies to

Limited Purpose Insurers (LPIs), Bermuda investment funds, Insurance-Linked Securities (ILS) funds, insurance managers, insurance agents, insurance brokers, insurance marketplace providers, innovative intermediaries, Class IIGB insurers, Class IILT insurers

Deadlines

• 30 September 2026: Deadline for industry comments on the proposed Guidance Note to be sent to policy@bma.bm.