The Bermuda Monetary Authority published a stakeholder letter summarising substantive feedback on its consultation for a proposed Payment Services Act (PSA) that would replace the Money Service Business Act 2016 with a tiered, risk-based licensing regime for Digital Facility Providers (DFPs), Payment Handling Providers (PHPs) and Payment Technology Providers (PTPs), alongside an AI Payments Hub. The Authority confirmed it will keep a functional perimeter designed to align with the Digital Assets Business Act 2018 (DABA) and reduce duplicative regulation. Stablecoin issuers will be able to choose a licensing pathway under the PSA or DABA depending on their activities, and DABA licensees will not need an additional PSA licence for stablecoin issuance for which they are already licensed. Custody under the DFP category will be limited to custody of the DFP’s own stablecoins, while custody of third-party assets will remain regulated under DABA. For the AI Payments Hub, the mandate is expected to include testing protocols for AI and programmable payments, supervised pilots, information sharing, and exploration of dispute resolution and redress models for on-chain payments, with a call for participation and entry criteria to follow. The PSA drafting will also refine the PHP definition and be supported by future guidance, while the proposed PTP definition has been updated to focus on technology providers with direct or indirect control over the initiation, authorisation or routing of a payment transaction, excluding firms that only provide communication or messaging infrastructure. On licensing, the Authority intends to create a standalone Class PG wholesale licence that is expressly restricted from retail activity and will be assessed using activity- and customer-based criteria rather than quantitative thresholds, and a separate Class R licence built around reciprocity arrangements, with detailed parameters to be published once finalised. Next steps include developing Codes of Practice, Rules and Guidance Notes to operationalise licensing and ongoing compliance, with further detail on timing and consultation for these materials to be communicated in due course.
Bermuda Monetary Authority 2025-11-19
Bermuda Monetary Authority responds to Payment Services Act consultation and confirms stablecoin licensing options plus new Class PG and Class R licences
The Bermuda Monetary Authority issued a stakeholder letter on its proposed Payment Services Act (PSA), set to replace the Money Service Business Act 2016 with a tiered, risk-based licensing regime for Digital Facility, Payment Handling, and Payment Technology Providers. The PSA will align with the Digital Assets Business Act 2018 to reduce regulatory duplication, offering stablecoin issuers licensing options. The Authority will develop Codes of Practice, Rules, and Guidance Notes to support licensing and compliance, with further details forthcoming.