Digital Asset Business Accounts Rules 2020 (Consultation Paper) (2020-06)

Summary

This is a Bermuda Monetary Authority consultation paper proposing new Digital Asset Business Accounts Rules 2020 under section 7 of the Digital Asset Business Act 2018. It seeks industry feedback on a proposed standard format for the Annual Statutory Financial Return that digital asset business (DAB) licensees would have to file, including a statutory balance sheet and accompanying disclosure notes tailored to digital asset holdings.

• Auditor's report: To be signed by the licensed undertaking's approved auditor, addressed to the Authority, stating whether the statutory balance sheet and notes comply with the Act and the Rules, with specified qualification triggers (scope limitations, valuation disagreements, non-compliance, going concern doubt).
• Statutory balance sheet: Prepared on Form 1SFS (Schedule I) on an unconsolidated basis, audited by an approved auditor, starting with the first financial year after the undertaking obtains its DAB licence; includes digital asset specific line items such as digital assets held and digital assets to be issued.
• Accompanying notes: Must address the matters listed in Schedule II, including digital asset valuation methodology, fair value hierarchy (Levels 1-3), governance and controls over custody and safekeeping of digital assets, related party transactions, contingencies and subsequent events.
• Currency and comparatives: Returns must be prepared in English, shown in a single currency (generally the currency of the licensed undertaking's principal Bermuda books and records, or Bermudian dollars where directed), with corresponding prior-year comparative amounts.
• Proposed commencement: The Rules are proposed to take effect on 31 December 2020 and apply to financial years commencing on or after that date.

As a consultation paper, this document is not yet binding; the Authority invited the digital asset industry and other interested persons to comment on the proposal before finalising the Rules.

Key obligations

• Submit comments on the proposed Rules to the Authority at innovate@bma.bm no later than 31 July 2020.
• Under the proposed Rules, licensed undertakings would be required to prepare an annual statutory financial return comprising an auditor's report, a statutory balance sheet (Form 1SFS) and accompanying notes (Schedule II).
• The statutory balance sheet would need to be audited by an approved auditor, starting with the first financial year after the undertaking obtains its DAB licence.
• Statutory financial returns would need to be prepared in English, in a single specified currency, with prior-year comparative amounts shown for each line item.
• Auditors would be required to qualify their report and detail specified deficiencies (scope limitations, valuation disagreements, non-compliance, going concern doubts) where applicable.

Applies to

digital asset business (DAB) licensees / licensed undertakings, approved auditors of DAB licensees

Deadlines

• 31 July 2020: Deadline for submitting comments on the Digital Asset Business Accounts Rules 2020 consultation paper to innovate@bma.bm.
• 31 December 2020: Proposed date the Rules come into operation, applying to financial years commencing on or after this date.