The Bermuda Monetary Authority has published a consultation on proposed supervisory guidance for the use of recognised stablecoins by eligible Bermuda-regulated investment funds, limited-purpose insurers, insurance-linked securities structures and certain intermediaries. The proposal is designed to clarify when stablecoin arrangements may be acceptable within existing insurance and investment fund frameworks, focusing on controlled institutional uses such as subscriptions and redemptions, treasury and settlement activity, premium collection, claims payments and certain approved capital, surplus, collateral and risk-transfer arrangements. Commercial insurers are outside scope, and the guidance does not treat stablecoins as equivalent to fiat currency, cash, deposits or legal tender. The draft guidance would limit recognition to fiat-backed stablecoins that meet supervisory eligibility criteria, including one-to-one backing by cash or cash equivalents, segregation of reserves, redemption at par by the close of the next business day under normal and stressed conditions, and at least monthly reserve attestations or audits. Algorithmic, synthetic, unsecured, crypto-backed, commodity-backed and materially undercollateralised stablecoins would generally not qualify. Entities would be expected to maintain governance, custody and wallet controls, due diligence on issuers and service providers, anti-money laundering and anti-terrorist financing and sanctions controls, valuation and disclosure frameworks, stress testing and fiat fallback plans. For limited-purpose insurers, the Authority would generally expect recognised stablecoin exposure to remain within 25% of total statutory capital and surplus or net assets unless a higher level is specifically approved. In the Insurance-linked securities sector, traditional special purpose insurer collateral structures would remain fiat-based unless the Authority decides otherwise through the relevant supervisory process. The Authority is seeking feedback on the proposed eligibility criteria, scope of use cases, exposure limits, treatment of Insurance-linked securities funds, AML and sanctions controls, custody and valuation expectations, disclosure and stress testing requirements, cross-chain restrictions and the supervisory notification process. Comments are due by 30 September 2026.
Bermuda Monetary Authority2026-07-20
Bermuda Monetary Authority consults on stablecoin guidance for insurance, ILS and fund structures, with 25% LPI capital exposure threshold
The Bermuda Monetary Authority has launched a consultation on proposed guidance for the use of recognised stablecoins in Bermuda-regulated funds, limited-purpose insurers, Insurance-linked securities structures and related intermediaries. The draft would permit only tightly defined fiat-backed stablecoins for specified institutional uses and would impose governance, custody, AML and sanctions, valuation and stress-testing expectations. It also proposes a general 25% cap on limited-purpose insurer stablecoin exposure relative to statutory capital and surplus or net assets unless the Authority approves more.