Premier On Initial Coin Offering Regulations

July 13, 2018 | 18 Comments

“The Initial Coin Offering Regulations that have been published, “Premier and Minister of Finance David Burt said in the House of Assembly today [July 13], explaining that the regulations “clearly define the minimum required information for ICOs” and “outline the compliance measures.”

“It is the Government’s view that Fintech can provide economic diversification, bring new business to the island, help boost GDP and create meaningful jobs, while helping to prepare our financial system and economy for the future,” the Premier said.

“ICOs may conducted in Bermuda only pursuant to a grant of consent from the Minister responsible for companies. The purposes of the ICO Regulations are to clearly define the minimum required information for ICOs and to outline the compliance measures that a company or limited liability company must adopt when conducting an ICO.”

The Premier’s full statement follows below:

Mr. Speaker, I am pleased to advise this Honourable House and the public of the Initial Coin Offering Regulations that have been published to supplement the Companies and Limited Liability Company [Initial Coin Offering] Amendment Act 2018.

Mr. Speaker, in November of 2017 I announced the members of the blockchain task force, which would be the catalyst to advance the Governments plans to create a FinTech industry in Bermuda. It is the Government’s view that Fintech can provide economic diversification, bring new business to the island, help boost GDP and create meaningful jobs, while helping to prepare our financial system and economy for the future.

Mr. Speaker, it was clear to the Government then that there was a lot of legal ambiguity in relation to FinTech and companies were looking for legal certainty. In response to this market demand, the Government set out to develop a new regulatory framework for Distributed Ledger Technology companies looking to operate in a well-regulated environment. The first step in the process was for the Government to put in legislation specifying how Companies and Limited Liability Companies, wishing to raise funds via an initial coin offering, will need to conduct themselves. The next step in the process was the passing of the Digital Asset Business Act 2018, which was legislation specifically put in place to regulate companies carrying on digital asset business and to protect the interests of clients or potential clients of these digital asset businesses.

Mr. Speaker, having successfully passed both pieces of legislation, the Government has now turned its attention to prescribing Initial Coin Offering Regulations. As Honourable Members are aware, ICOs may conducted in Bermuda only pursuant to a grant of consent from the Minister responsible for companies. The purposes of the ICO Regulations are to clearly define the minimum required information for ICOs and to outline the compliance measures that a company or limited liability company must adopt when conducting an ICO.

Mr. Speaker, Minimum Required Information, as outlined in the ICO Regulation includes such things as:

  • Providing information on the all persons involved with the ICO;
  • Providing a description of the project, including key features of the product or service, the target market, how the ICO will be financed and the amount of money the company is intending to raise via the ICO;
  • Providing information on the technical standards of the digital asset that will be issued;
  • Providing information on whether the digital asset can be traded or transferred between persons; and
  • Providing a description of the technical standards or software, blockchain or other distributed ledger technology that will be used to identify participants in the ICO.

Mr. Speaker, Compliance Measures, as outlined in the ICO Regulations, includes such things as:

  • The need to identify any participant and verify the participant’s identity;
  • The need for a company to ensure that it applies appropriate measures relating to identification and verification of the participants in the ICO before it issues a digital asset;
  • Instances where companies must conduct enhanced due diligence on ICO participants;
  • The types of records a company is required to keep and the retention period;
  • The need for a company to carry out an internal compliance review on its ICO;

Mr. Speaker, it is important to note that the approach taken in developing the regulations is the same approach we have traditionally taken when developing regulations for our local financial institutions. Traditionally, we have used a risk based approach, meaning that the amount of regulations a company will be subject to is based on the level of risk the activities of the company is engaged in. For instance, if a company’s engages in activities that could potentially expose it to a high degree of money laundering risk, it will be subject to anti-money laundering regulations. However, if a company is running a project without any money laundering risk, then this company should not be covered by the same regulations.

Mr. Speaker, the Proceeds of Crime [Anti-Money Laundering and Anti-Terrorist Financing] Regulations 2008 were used as a blueprint when it came to the Compliance Measures, adopting parts of the Proceeds Of Crime Act Regulations that pertain to ICO type activities.

Mr. Speaker, any company wanting to commence the process for issuing an ICO from Bermuda can visit www.fintech.bm – to complete the application form. Once the form is completed and the white paper has been submitted for review the approval process is estimated to take four weeks.

Mr. Speaker, we continue to communicate to the world that Bermuda is a significant option for FinTech related businesses and that we have expeditiously developed rules and regulations which ensure that FinTech companies and their activities are well-regulated, within a safe environment for the industry to grow, whilst also ensuring that this new regulatory environment protects consumers and the reputation of this jurisdiction.

Thank you, Mr. Speaker.

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Comments (18)

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  1. Bolt Action Rifle says:

    To date many ICO’s in other countries have been scams. How will the Govt./BMA sift through to make sure that none of the Bermuda ICO’s are scams?

    • Going downtown says:

      Easy! It’s called due diligence and ensuring that whoever is behind an offering has funding in place and has a suitable background and track record to conduct business. An ICO is fundamentally no different than and IPO. Both are speculative investments and Bermuda will do it’s homework to identify those who don’t qualify. This will not be the Wild Wild West like in other countries as our BMA is leading the charge!

      • Answer says:

        Except that IPOs are highly regulated and well-understood, and even some of those go wrong.

        You people have no idea what you’re risking.

        • Ringmaster says:

          @Answer. I think, and hope Going downtown is being flippant or sarcastic. If not, I agree with you.

          • Going downtown says:

            Answer needs to chill! Of course I am being sarcastic! Let’s all not lose our sense of humor!

        • Oh Jay says:

          “You people have no idea what you’re risking.”

          they don’t care.
          25-11

      • Keen listener says:

        You are correct Bolt, there have been a number of scams around the world. But it’s important to note that there have been a tremendous amount of innovations and successes in the ICO space. What Bermuda is doing legislatively sets it apart from other jurisdictions. We have leveraged our significant experience in regulation and international financial compliance to create the world’s first Digital Asset legislation and among the early wave of robust ICO legislation. The Premier and the Minister have sought guidance from the BMA, key international industry experts and local professionals.

  2. facts of the rock says:

    so all of a suden the plp know all about blockchain,yeh rite!

  3. JIGGSBDA says:

    I think at some point the BMA’s Integrity has to be relied upon.

    How come we are world leaders in Insurance Reinsurance and all of a sudden all the posters are casting aspersions on the BMA, come on.

    The need to be cautious is a given, let the people that do that best do their jobs.

    The BMA has not become a backwater authority because the PLP is the government.

    Enough of the nasty comments, there are very fine and credible people in the BMA They should be left alone to do their jobs.SMH

    • Oh Jay says:

      “How come we are world leaders in Insurance Reinsurance”

      We’re not.

      we could have been, but the government before the last one put a stop to that.

      see Global Crossing as well….yet another failure at the hands of the plp.

      • gBDA says:

        If Bermuda has 30%Of the world’s capacity of reinsurance is the leading captive domicile and leads ILS I think that means we’re leaders. but i don’t want to get into a spraying contest with a skunk. impossible to win

        • Oh Jay says:

          Just keep changing your nickname…we’ll never figure it out…we’re just dumb islanders.

          The only skunk here is you.

  4. Stormy daniels says:

    Pyramids!!

  5. Stevie says:

    Burt…cluelesss

  6. Joe Bloggs says:

    If the Premier doesn’t like the vetting the BMA does, will he change the law like he did for the Casino Gaming Commission so he can replace people at will and give them “general direction”?

  7. Bullwinkle T. Mooseknuckle says:

    Premier…I respect you for this…but…Google worst case senario…and please don’t be upset with me….I love Bermuda. .same as you.

    • Ringmaster says:

      Unfortunately for Bermuda, the snake oil salespeople have seen the weakness. Bermuda has a five star reputation, and this gives credibility for the snake oils to use. Premier Burt is being played and his ego will destroy Bermuda’s hard fought for reputation. Pity for the Bermudians looking for jobs, and for Bermuda as a whole.

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