The Bermuda Monetary Authority published a stakeholder letter summarising feedback on its consultation on a Proposed Payment Services Act that would replace the Money Service Business Act 2016 with a tiered, risk-based licensing framework for Digital Facility Providers, Payment Handling Providers and Payment Technology Providers, alongside an AI Payments Hub. Respondents broadly supported the modernisation of Bermuda’s payments regime and the proposed proportionate, innovation-enabling approach. The Authority will retain a functional regulatory perimeter designed to minimise overlap with the Digital Assets Business Act 2018 while maintaining coherence between the two regimes. Stablecoin issuers will be able to choose licensing under the Payment Services Act or the Digital Assets Business Act depending on their model, and Digital Assets Business Act licensees already permitted to issue stablecoins will not need an additional Payment Services Act licence for that activity; custody by Digital Facility Providers will be limited to custody of their own stablecoins, with third-party custody remaining regulated under the Digital Assets Business Act. For the AI Payments Hub, the mandate is expected to include testing protocols for AI and programmable payments, supervised pilots, information sharing with participants, and exploration of dispute resolution and redress models for on-chain payments, with a call for participation and entry criteria to follow. The Payment Handling Provider definition will be further refined in the Bill and supported by guidance, while the Payment Technology Provider definition is being updated to focus on technological services that exercise direct or indirect control over initiation, authorisation or routing of payment transactions, excluding the sole provision of communication or messaging infrastructure. The Authority also intends to introduce a distinct Class PG wholesale licence expressly restricted from retail activity, using activity-based and customer-based criteria rather than quantitative thresholds, and to establish Class R as a separate licence class for reciprocity-based cross-border operations, with detailed parameters to be published once arrangements are finalised. Next steps include developing the supporting regulatory instruments needed to operationalise the new framework, including Codes of Practice, Rules and Guidance Notes, with further information on timing and any consultation process to be communicated in due course.
Bermuda Monetary Authority 2025-11-19
Bermuda Monetary Authority sets out post consultation direction for the Proposed Payment Services Act including stablecoin licensing options and new Class PG and Class R licences
The Bermuda Monetary Authority issued a stakeholder letter on its proposed Payment Services Act, confirming a tiered, risk-based licensing framework for Digital Facility, Payment Handling and Payment Technology Providers, and outlining an AI Payments Hub mandate. The Authority will maintain a functional perimeter aligned with the Digital Assets Business Act 2018, allow stablecoin issuers to choose between regimes, refine provider definitions, and introduce a Class PG wholesale licence and a Class R licence for reciprocity-based cross-border operations. It will now develop supporting regulatory instruments, including Codes of Practice, Rules and Guidance Notes.