The Bermuda Monetary Authority (BMA) has issued a call for proposals for a collaborative pilot project to test “embedded supervision” in decentralised finance (DeFi), focusing on integrating regulatory oversight, compliance checks and automated reporting into DeFi technology stacks such as smart contracts, protocols and data layers. The BMA expects the pilot to generate insights that will inform how its supervisory mechanisms evolve in response to DeFi. The initiative is open to a wide range of stakeholders, including digital asset businesses, foundations, protocols, fintech companies, DeFi operators, technology developers and academic institutions. The pilot objectives span building a risk-based understanding of DeFi models and governance, assessing technical feasibility and operational effectiveness of real-time supervision and data transmission to regulators, and monitoring DeFi risk parameters to develop best practices and quantify efficiency gains. Example pilot concepts include a regulatory decentralised autonomous organisation with the BMA as a non-voting member, embedded supervision for DeFi lending platforms, coding regulatory requirements (including licence conditions) into smart contracts, real-time compliance reporting tools, stablecoin collateral monitoring with automated alerts, and establishing regulatory nodes on public blockchains. Submissions are due by 30 April 2025 and must follow the BMA’s proposal guidelines, including a work plan, technology overview and risk analysis, with a 20-page limit. No fees apply to the initiative, although pilots that require a licence would remain subject to fees under the Digital Asset Business Act (DABA), and participation does not imply regulatory approval or exemption from existing statutory obligations.

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