Digital Asset Business (Custody of Client Assets) Rules 2025

Summary

These Rules, made by the Bermuda Monetary Authority under the Digital Asset Business Act 2018, set out detailed requirements for how licensed digital asset business undertakings must hold, segregate, account for and protect client assets (fiat and digital) when they provide custodial wallet services. They cover day-to-day segregation and payment handling, what happens on a licensed undertaking's or intermediary's default (pooling), and ongoing record-keeping and reconciliation duties.

• Scope: Apply to client assets held by licensed undertakings that provide custodial wallet services under section 10(2)(d) of the Digital Asset Business Act 2018.
• Segregation: Client assets must be kept separate from the licensed undertaking's own assets and paid into a designated client bank account or client wallet account.
• Timing of payments in: Client assets must generally be paid into a client account no later than the next day after receipt or settlement; mixed remittances must have non-client portions paid out within one day of expected clearance.
• Controls and annual review: Licensed undertakings must implement client asset controls proportionate to their business, and have these reviewed annually by a qualified person (internal auditor, approved auditor, or Authority-approved person) who produces a report.
• Report retention: The annual qualified person's report must be kept for at least five years at the head office (Class F/M licensees) or principal place of business (Class T licensees) and produced to the Authority on request.
• Default and pooling: On a 'pooling event' (default of the licensed undertaking, an Authority direction, or default of an intermediary), client assets in client accounts are pooled and distributed to clients on a pari passu basis, with specific rules for assets held by defaulting intermediaries.
• Notification on pooling event: The licensed undertaking must inform the Authority and affected clients of a pooling event as soon as practicable after it occurs.
• Interest disclosure: Licensed undertakings must tell clients in writing whether interest is payable on client assets and on what terms.
• Accounting and daily calculation: Licensed undertakings must account properly for client assets, keep them untangled from other assets, and calculate each client's credit balance daily, making good any shortfall themselves.
• Reconciliation: Client account balances must be reconciled with intermediary statements and internal client totals at least monthly, completed within 10 days of the reconciliation date, with differences corrected forthwith.

The Rules were made on 12 February 2025 and are operative from that date; they apply to all licensed undertakings conducting custodial wallet services regardless of licence class, with some obligations (record retention location) varying by licence class (Class F, M or T).

Key obligations

• A licensed undertaking must keep client assets separate from its own assets and pay them into a client account.
• A licensed undertaking must pay client assets into a client account as soon as possible and no later than the next day following receipt, or otherwise deal with them so they cease to be client assets.
• Where an automated transfer of client assets is received into the undertaking's own account, it must transfer the assets into a client account no later than the next day after settlement.
• For mixed remittances, the full sum must be paid into the client account and any non-client portion paid out within one day of expected clearance.
• A licensed undertaking must implement client asset controls appropriate to the nature, scale and complexity of its business.
• A licensed undertaking must have its client asset controls reviewed annually by a qualified person who prepares a report.
• The annual qualified person's report must be retained for not less than five years at the head office (Class F/M) or principal place of business (Class T) and made available to the Authority on request.
• A licensed undertaking must inform the Authority and all affected clients of any pooling event as soon as practicable after it occurs.
• A licensed undertaking must specify to clients in writing whether interest is payable on client assets and on what terms.
• A licensed undertaking must calculate each client's credit balance daily and pay in an equivalent sum of assets to cover any deficit or misuse of another client's assets.
• A licensed undertaking must reconcile client account balances (against intermediary statements and internal client totals) at least monthly, completed within 10 days of the reconciliation date, and correct differences forthwith.
• A licensed undertaking must comply with these Rules even where it passes client assets to an intermediary.
• On default of an intermediary, a licensed undertaking may avoid a pooling event by repaying clients or paying into a client account an amount equal to the client assets held with that intermediary.

Applies to

licensed undertakings providing custodial wallet services (digital asset business licensees, including Class F, Class M and Class T licence holders)

Deadlines

• 12 February 2025: Operative date of the Rules.
• annually: Client asset controls must be reviewed annually by a qualified person, who prepares a report.
• not less than five years: Retention period for the annual qualified person's report.
• next day following receipt: Deadline for paying client assets into a client account after receipt.
• within one day: Deadline for paying out the non-client portion of a mixed remittance after expected clearance.
• as soon as practicable: Deadline for notifying the Authority and affected clients of a pooling event.
• within one month after the pooling event: Period within which client assets held by an intermediary should be returned before distributions can be made in advance.
• not less frequently than once a month: Frequency required for reconciliation of client account balances.
• within 10 days of the date to which the reconciliation relates: Deadline for completing the monthly reconciliation.

Related documents

• This document commences Digital Asset Business Act 2018
• This document is made under Digital Asset Business Act 2018