Bermuda, the Small Island Nation with Huge Crypto Ambitions
Bermuda enacted one of the world's first national digital asset licensing laws in 2018, and its regulator has spent the years since deliberately keeping its license count small. Now a 2024 framework review is expanding the scope to cover DeFi-adjacent intermediaries and tokenized securities, and the island's reinsurance tradition may be the hidden logic behind the whole strategy.
Year Bermuda enacted DABA, roughly five years before the EU's MiCA regime (BMA)
Full Digital Asset Business licenses issued as of Q1 2025, a deliberately narrow number (BMA)
Gross premiums written by Bermuda's (re)insurance sector in 2023, the economic baseline being compared (BMA annual digest)
The Thesis
Bermuda is not trying to become the next crypto tax haven or a permissive flag-of-convenience jurisdiction. The argument here is that the Bermuda Monetary Authority has built something closer to a reinsurance-style risk infrastructure hub: a small, credentialed, supervisory-grade environment where institutional capital can domicile digital asset operations and have that domicile carry genuine regulatory weight.
The comparison to reinsurance is not metaphorical. The island's (re)insurance sector, which generated approximately 60 billion dollars in gross premiums written in 2023 according to the BMA's annual statistical digest, did not grow by attracting every insurer on the planet. It grew by attracting the right ones under a framework that global counterparties learned to trust. The BMA appears to be running the same playbook for digital assets.
Why It Matters
Institutional crypto firms operating across multiple jurisdictions are actively looking for credible offshore domiciles that sit outside the EU's MiCA regime and outside the SEC's enforcement-first approach. Bermuda offers both a functioning statutory framework and a regulator with a track record, which is a combination that is harder to find than it sounds.
The Cayman Islands and the British Virgin Islands are watching Bermuda's licensing conversion rates closely. Both jurisdictions have their own digital asset frameworks, and the question of which Atlantic or Caribbean domicile wins the next wave of institutional crypto registration will be shaped in part by how the BMA's 2024 framework review lands in practice.
There is also a domestic tension worth naming. Bermuda's pension and trust administrators, institutions built to service the reinsurance sector, are being asked to handle digital asset structures they were not designed for. The infrastructure that made Bermuda credible for reinsurance does not automatically transfer to tokenized fund administration or DeFi-adjacent custody.
What Changed
In late 2024, the BMA completed a structured review of its Digital Asset Business Act and signaled forthcoming amendments that would expand the scope of covered activities. The two most significant additions are DeFi-adjacent intermediaries and tokenized securities custodians. Both categories were either absent or ambiguous in the 2018 original act.
This matters because the 2018 DABA was written to cover businesses that looked more or less like exchanges or wallet providers. The current landscape includes a much wider range of activities: protocol-layer services, on-chain custody, tokenized real-world asset structures, and hybrid products that blend securities and digital asset characteristics. The BMA's decision to name and cover these categories rather than leave them in a regulatory gray zone is a meaningful policy choice.
The Evidence
The Digital Asset Business Act was enacted in September 2018, according to the BMA's own legislative record, making it one of the first comprehensive national digital asset licensing laws globally. The EU's Markets in Crypto-Assets regulation, by comparison, reached full applicability in late 2024, approximately six years later.
As of Q1 2025, the BMA had issued approximately 20 to 25 full Digital Asset Business licenses. The regulator has described this as a deliberate preference for quality over volume. For context, Bermuda's population is approximately 64,000 people. The ratio of institutional-grade crypto licenses to population is disproportionately large by any reasonable measure.
The Bermuda Stock Exchange listed its first tokenized fund structure in 2022 and had registered over one billion dollars in notional value across tokenized fund and bond listings as of early 2025, based on BSX data. That number is small relative to the size of global tokenized asset markets, but it represents a real track record rather than a pipeline of proposed listings.
The FTX collapse in November 2022 is the uncomfortable piece of the evidence set. FTX held a Bermuda Class F digital asset business license at the time it failed. The BMA's public response was to tighten supervisory expectations around client asset segregation and group-level oversight. Whether that response was adequate, and whether Bermuda's due diligence process should have caught FTX's structural problems earlier, remains a fair question for any firm evaluating the framework.
The case against this
The most direct counterargument is FTX. A jurisdiction that licensed one of the largest crypto fraud cases in history, regardless of how quickly it tightened its framework afterward, carries reputational baggage that takes years to clear. Institutional due diligence teams will note it.
A second counterargument is scale. Bermuda's 64,000-person population means its regulatory apparatus is thin. The BMA is a capable regulator by offshore standards, but it does not have the staff depth of the FCA, the ECB, or even the CFTC. If the number of licensees doubles or triples, the supervisory capacity question becomes acute.
Third, the reinsurance analogy has limits. Reinsurance is a mature, well-understood product category with decades of standardized documentation and actuarial practice. Digital assets, particularly DeFi-adjacent products and tokenized securities, are not. The BMA's framework may be coherent on paper while the underlying products it is asked to supervise remain structurally novel and poorly understood.
What would change this thesis:
- A second major licensee failure, particularly one that occurs after the post-FTX supervisory tightening, would suggest the framework has structural gaps that amendments alone cannot fix.
- If the Cayman Islands or BVI produces a competing framework that matches Bermuda's statutory specificity while offering lower operational costs, the licensing advantage narrows significantly.
- If the BMA's 2024 amendments produce a large jump in license volume without a corresponding increase in supervisory staffing, the quality-over-volume positioning becomes harder to sustain.
- A shift in the EU's MiCA implementation toward third-country equivalence recognition could reduce the appeal of Atlantic offshore domiciles for firms that primarily serve European institutional clients.
What to Watch Next
The most immediate signal to monitor is the formal publication of the DABA amendment text following the BMA's 2024 review. The draft language around DeFi-adjacent intermediaries will reveal how precisely the regulator intends to draw the perimeter. Vague language at that stage will undercut the framework's institutional credibility.
The second signal is BSX listing activity for tokenized bond and fund structures through the remainder of 2026. If notional value crosses five billion dollars, it suggests the venue is gaining genuine traction with institutional issuers rather than just early adopters. If growth stalls near current levels, the tokenization narrative needs revisiting.
Third, watch the Bermuda (re)insurance sector's response. If major reinsurance groups begin using Bermuda's digital asset infrastructure for catastrophe bond tokenization or parametric insurance on-chain, that would represent genuine convergence of the two pillars of the economy rather than parallel development.
- Bermuda Monetary Authority, Digital Asset Business Act legislative record and supervisory statements, 2018 to 2025. bma.bm. Checked May 2026.
- BMA Annual Statistical Digest 2023, (re)insurance gross premiums written figure. bma.bm. Checked May 2026.
- Bermuda Stock Exchange, tokenized fund and bond listing disclosures, 2022 to early 2025. bsx.com. Checked May 2026.
- BMA public statements on FTX Class F license and post-collapse supervisory guidance, November 2022. Checked May 2026.
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Subscribe to CryptoPickr →CryptoPickr may earn from ads, sponsorships, or affiliate links. Compensation does not affect editorial conclusions. Sources: Bermuda Monetary Authority (bma.bm), Bermuda Stock Exchange (bsx.com), BMA Annual Statistical Digest 2023, BMA post-FTX supervisory statements November 2022.