Bermuda to draft Crypto Regulations, Proposes to include ICOs

Chirayu Choubisa

Chirayu Choubisa

April 16, 2018 1:04 pm

Bermuda to draft Crypto Regulations, Proposes to include ICOs | Coindelite News
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Bermuda Unveils Draft Cryptocurrency Regulations, Plans to Embrace ICOs

The Bermuda Monetary Authority has published a consultation paper on draft regulation concerning to  “virtual currency businesses” and Initial Coin Offerings (ICOs). The proposed bill tries to build a framework that encourages and fosters the development of Bermuda’s nascent digital currency industry.

Bermuda Announced Regulatory Plans for Crypto Industry

Mr. Wayne Caines, The Minister of National Security, explained the proposed regulation a “landmark legislation for Bermuda.”

He Included:

“The emergence of new financial products and services created through the use of technology has opened new and exciting possibilities for entrepreneurs and businesses.”

On Thursday, Mr. Caines presented “Bermuda’s Fintech strategy” to “more than 150 of Bermuda’s key business partners.” Mr. Wayne Caines said that “the government recognize[s] that there’s significant interest in virtual currencies and blockchain technology,” emphasizing Bermuda’s desire to “become a global leader in the Fintech space.”

Crypto Sector to be Encouraged Despite Digital Currency Not Acknowledged as Legal Tender

The consultation paper defines  “virtual currency [as] a digital representation of value that can be digitally traded,” continuing that “such does not have legal tender status […] in any jurisdiction,” still, fulfils monetary “functions only by agreement within the community of users of the virtual currency.”

While the report notes that “The virtual currency sector is varied in business types,” the major participants are depicted as being comprised of “ICO issuers,” “virtual currency exchange providers and traders,” “custodial wallet providers,” and “virtual currency miners.”

The suggested framework will require that business facilitating the sale of or providing services associating to digital currencies  collect and retain vital information relating to customers nothing that the digital currency sector “presents a tremendous risk that requires robust […] Anti-Money Laundering/Anti-Terrorism Financing (AML/ATF) regulation.”

Particularly Focusing on ICOs

Under the recommended legislation, “an initial coin offering will be treated as a restricted business activity that will require approval from the minister of finance.”  As such, ICO issuers will be required to comply with specific regulations – the “Companies and Limited Liability Company (Initial Coin Offering) Act – in addition to applying for consent from the finance minister.”

An organization applying for permission to conduct an ICO will be needed to provide information regarding:

“The company conducting the ICO and the underlying digital asset offered for sale; The development and implementation of any product, service or other project related to the ICO, including timelines for completion; The target amount to be raised through the ICO; Rights, features, functionality and intended transferability of the digital asset offered for sale. The technology to be used and confirmation of the ability of the technical platform to enable the collection, confirmation and storage of purchaser identity information; and compliance and auditing of ICO transactions.”

Mr. Wayne Caines said:

“By being one of the few countries in the world to specifically regulate ICOs, we believe that the suggested regulatory framework will provide legal certainty to companies looking to conduct ICOs in Bermuda. Embracing this new world with responsible regulation could lead to the attraction of new companies and capital investment to Bermuda, further government revenues, new career, employment and training opportunities for Bermudians and the laying of a foundation for a prosperous future for our next generation of Bermudians.”

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