Digital Asset Business Act 2018 - Head Office Guidance (April 2021)

Summary

This is BMA guidance explaining how the Authority assesses compliance with the head office requirement in Section 21 of the Digital Asset Business Act 2018 (DABA), which requires licensed digital asset businesses to be directed and managed from a head office in Bermuda. It does not create new legal obligations but clarifies the factors and proportionality principle the Authority applies when evaluating compliance.

• Scope: Section 21's head office requirement applies only to Class M (Modified) and Class F (Full) licence holders; Class T (Test) licensees are exempt.
• Primary factors: Where strategy, risk management and operational decision-making occur; whether senior executives responsible for decision-making are located in Bermuda; and where board meetings occur.
• Secondary factors: Where management gives effect to policy decisions; the residence of officers/employees; and whether at least one director is ordinarily resident in Bermuda.
• Proportionality: The Authority applies a substance-over-form, proportionate approach based on an entity's nature, scale, complexity and risk profile; meeting only one factor may still be compliant, while meeting several may still be non-compliant if the overarching principle is not met.
• Transition allowance: Newly licensed undertakings may be given time, generally not exceeding 24 months from the granting of the licence, to substantially meet the head office requirement, subject to the Authority's discretion.

The guidance is interpretive rather than prescriptive, intended to help Class M and Class F licensees and their advisers understand how the BMA will evaluate head office compliance on a case-by-case, risk-based basis.

Key obligations

• Class M and Class F digital asset business licensees must be directed and managed from a head office located in Bermuda, as required by Section 21 of the DABA.
• Newly licensed undertakings seeking to rely on partial compliance must demonstrate to the Authority's satisfaction that the head office requirement will be substantially met within a specific timeline, generally not exceeding 24 months from licence grant.

Applies to

Digital Asset Business (DAB) licensees, Class M (Modified) licence holders, Class F (Full) licence holders

Deadlines

• 24 months from the granting of the licence: General maximum timeline within which newly licensed undertakings are expected to substantially meet the head office requirement under Section 21 of the DABA, where partial compliance was accepted at licensing.