The Bermuda Monetary Authority (BMA) has published a discussion paper on asset tokenisation, seeking stakeholder input on the opportunities, risks and regulatory considerations arising from representing real-world assets on distributed ledger technology. The paper tests whether Bermuda’s existing, largely principles-based digital asset regime provides sufficient certainty for tokenisation activity or whether targeted enhancements or guidance are needed, applying a “same risk, same regulatory outcome” approach. Central bank digital currencies and tokenised deposits are explicitly outside scope. The discussion paper distinguishes between off-chain “digital twins” and on-chain “native tokens” and explores how tokenised activity may interact with multiple Bermuda frameworks, including potential overlap where tokenised investments qualify both as “digital assets” under the Digital Asset Business Act 2018 and as “investments” under the Investment Business Act 2003. It also examines tokenisation platform providers that may facilitate trading or lifecycle management without holding client funds, and the implications for the regulatory perimeter. For investment funds, the BMA highlights that tokenised funds typically fall under the Investment Funds Act 2006 and potentially the Digital Asset Issuance Act 2020, raising questions about dual authorisation, governance of custodians and administrators, and the use of DLT-based registers. Sector chapters consider tokenisation in insurance, including insurance-linked securities and interaction with existing structures and market infrastructure, and tokenisation of alternative assets such as SPV-based real estate exposures, 1:1 precious metals tokens backed by vaulted holdings, and tokenised energy and environmental assets with verification and double-counting risks. Cross-cutting sections address permissioned versus permissionless DLT, potential convergence toward platform-level risk concentration (including universal wallets), AML/ATF features embedded in token standards, cyber risks across the token lifecycle (including smart contracts, bridges and oracles), and financial stability issues such as liquidity mismatches, composability-driven dependency risk and rehypothecation. Responses are due by close of business on 9 January 2026. The BMA plans to publish a consultation paper early next year reflecting feedback and setting out more targeted proposals.
Bermuda Monetary Authority 2025-11-05
Bermuda Monetary Authority launches discussion paper on asset tokenisation and seeks comments by 9 January 2026
The Bermuda Monetary Authority has issued a discussion paper on asset tokenisation, seeking stakeholder input on opportunities, risks and regulatory considerations for representing real-world assets on distributed ledger technology under Bermuda’s digital asset regime. The paper assesses overlaps across the Digital Asset Business Act 2018, Investment Business Act 2003, Investment Funds Act 2006 and Digital Asset Issuance Act 2020, and examines implications for tokenisation platforms, tokenised funds, insurance-linked securities and alternative assets. It also addresses permissioned versus permissionless DLT, platform-level risk concentration, embedded AML/CFT features, cyber risks and financial stability concerns.