Digital Asset Business Amendment Act 2019 Consultation Paper

Summary

This is a Bermuda Monetary Authority consultation paper seeking industry feedback on a draft Digital Asset Business Amendment Act 2019, which would amend the Digital Asset Business Act 2018. The paper explains proposed definition changes, scope expansions, new fee powers, and housekeeping fixes to the DAB regime, and attaches the draft Bill text. It is a proposal only; nothing is yet in force.

• New and amended definitions: Removes the definition of exchange and replaces it with digital asset exchange; amends qualified custodian and digital asset services vendor; adds digital asset benchmark, digital asset benchmark administrator, digital asset derivative, digital asset derivative exchange, digital asset derivative exchange provider and digital asset trust services.
• Expanded scope: Trust companies acting as fiduciary or trustee of digital assets would need to be recognised as a qualified custodian or engage one; new licensable activities (benchmark administrators, derivative exchange providers, derivative exchanges) would be added to section 10.
• Exemption process changes: Companies seeking a section 11 exemption order would need to file an application and declare annually that they continue to qualify; a problematic sub-clause (11(5)(a)) would be deleted.
• Licence publication: The Authority would publish more information per licence on its website, including licence type, licensed activities, expiry date and physical address.
• Fee flexibility: The Authority would gain power to exempt or reduce fees for registered persons holding multiple licences (e.g. DAB plus investment business), subject to conditions.
• Client asset handling: A new Rule (expected by year end 2019) would clarify that client assets include both digital assets and client monies, aligning with the Investment Business (Client Money) Regulations 2004.
• Annual return expansion: DAB annual returns would need to include detailed governance and group structure information (board/management details, service providers, jurisdictions of control functions, group organisational chart, etc.).
• Market abuse provisions: The DAB Code of Conduct would be expanded to prohibit market abuse, insider dealing, unlawful disclosure and market manipulation; DABs would need systems to monitor and detect abuse and report suspicions to the Authority.
• Court petition power: The Authority would gain power to petition the court to appoint a person to advise a DAB or take charge of its business and client assets in the public interest.
• Housekeeping fixes: Minor technical corrections to sections 7, 10, 11, 31 and 48, including clarifying that licensed undertakings must prepare financial statements to be audited (not already audited statements).

Because this is a consultation paper with an accompanying draft Bill, none of the substantive changes are yet binding law; they are proposals open for industry comment before finalisation.

Key obligations

• Submit comments on the consultation paper and draft Bill to policy@bma.bm no later than 21 June 2019.

Applies to

Digital Asset Business (DAB) licensees, trust companies, digital asset exchanges, digital asset derivative exchange providers, digital asset benchmark administrators, digital asset services vendors, qualified custodians, investment businesses

Deadlines

• 21 June 2019: Deadline for interested persons to submit comments on the consultation paper and draft Bill to policy@bma.bm

Related documents

• This document amends Digital Asset Business Act 2018