Cryptolicense in Bermuda: Empowering Your Cryptobusiness

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DISCLAIMER: The term "cryptolicense" in this text refers to the digital asset business license (DAB license). The use of the term "cryptolicense" is intended solely to simplify the perception of the text by customers and visitors to the website.

The financial services regulator, the Bermuda Monetary Authority (BMA), and the Government of Bermuda are now well underway with the implementation of a blockchain and digital currency strategy.

Bermuda has a comprehensive regulatory framework to ensure that business in this sector is conducted in accordance with international standards. The Digital Asset Business Act 2018 (DABA) created a legislative framework for digital asset businesses and services to operate in a regulated environment in or from Bermuda.

In addition to the DABA, certain digital currency transactions are also governed by the Digital Asset Issuance Act 2020 (DAIA) and the Digital Asset Issuance Rules 2020 (DAIR). Companies licensed and wishing to continue virtual asset activities in Bermuda's jurisdiction must also comply with the provisions of:

  • any applicable legislation, including the Proceeds of Crime Act 1997, the Anti-Terrorism (Financial and Other Measures) Act 2004 and the Proceeds of Crime (Anti-Money Laundering and Anti-Terrorist Financing) Regulations 2008
  • codes of practice issued by the BMA
  • international sanctions in Bermuda

    • DABA created a legislative framework for digital asset businesses and services to operate in a regulated environment in or from Bermuda

    Key Numbers about Cryptolicense in Bermuda

    up to 3 months

    term of obtaining cryptolicense

    0%

    corporate income tax (CIT) rate

    $100,000

    minimum net assets for Class M and F licensees

    0%

    capital gains tax (CGT) rate

    at least 1

    shareholder in the company

    0%

    value added tax (VAT) rate

    Legal Opinion about Cryptolicense in Bermuda

    photo1

    Ganna Voievodina

    Manimama

    |

    CEO

    "Obtaining a cryptolicense in Bermuda offers a robust regulatory framework ideal for fintech and cryptocompanies. Bermuda's progressive stance on cryptocurrencies, combined with its transparent legal system, provides a secure environment for cryptocurrency operations. This jurisdiction is known for its favorable business climate, making it an attractive destination for companies seeking regulatory clarity and global recognition".

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    Types of Activities with License in Bermuda

    Issuing, selling or redeeming virtual coins, tokens or any other form of digital asset

    creating, transferring ownership, or exchanging these digital forms of currency, respectively, while ensuring compliance with relevant regulatory standards and maintaining market integrity.

    Providing custodial wallet services

    means provision of the services of storing or maintaining digital assets or a virtual wallet on behalf of a client.

    Operating as a payment service provider business utilising digital assets which includes the provision of services for the transfer of funds

    offering financial services for the transfer of funds using digital currencies, ensuring secure and efficient transactions within regulatory frameworks.

    Operating as a digital asset derivative exchange provider

    means a person operating a digital asset derivative exchange and that provide the services of— creating, selling or otherwise entering into digital asset derivatives contracts; clearing and settlement of digital asset derivatives.

    Operating as a digital asset exchange

    means operating as a centralized or decentralized electronic marketplace used for digital asset issuances, distributions, conversions and trades, including primary and secondary distributions, with or without payment; provided that digital asset conversions and trades may also be entered into by the electronic marketplace as principal or agent.

    Operating as a digital asset services vendor

    means a person that under an agreement as part of its business can undertake a digital asset transaction on behalf of another person; has power of attorney over another person’s digital asset; operates as a market maker for digital assets; or operates as a digital asset benchmark administrator.

    Operating as a digital asset trust services provider

    means acting as a fiduciary, agent, or trustee on behalf of another person for the purpose of administration and management of a digital asset.

    Operating as a digital asset lending or digital asset repurchase transactions service provider

    means a person facilitating digital asset lending or digital asset repurchase transactions either as principal or agent.

    Benefits of Obtaining a Cryptolicense in Bermuda

    Regulatory Clarity and Compliance:

    • Bermuda boasts a robust regulatory framework for digital assets, ensuring legal clarity.
    • Obtaining a cryptolicense guarantees compliance with relevant laws, offering businesses a clear operational path.

    Significant Tax Benefits:

    • Bermuda offers an advantageous tax regime with no corporate income tax, capital gains tax, or dividend withholding tax.
    • These benefits provide a favorable financial environment for cryptocurrency businesses.

    Expansive Global Market Access:

    • A Bermuda crypto license facilitates entry into global markets, expanding business horizons.
    • Regulated entities are preferred by many countries, aiding in forging international partnerships.

    Cost-Effective Licensing Process:

    • Bermuda's licensing process is designed to be cost-effective, offering significant savings compared to other jurisdictions.
    • This cost efficiency is particularly advantageous for startups and smaller enterprises.

    Strong Investor Protection:

    • Bermuda's regulations include stringent disclosure requirements and anti-money laundering procedures.
    • These protections can attract investors seeking a secure and regulated environment.

    Strategic Geographic Location:

    • Bermuda’s location offers strategic advantages for businesses aiming for international reach.
    • Proximity to major markets in North America and Europe facilitates easier operations and expansion.
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    Our Services

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    Popular package

    Premium

    Full list of necessary services to set up of cryptocompany with connection to KYC providers, C2B account for the crypto transactions

    • Company formation in Bermuda
    • Individual AML/KYC policies
    • DAB application submission
    • Address of registration for 1 year
    • Full communication with the BMA
    • Search, integration, direct employment agreement with a auditor
    • Opening C2B account for crypto activities
    • Setting up KYC/KYB Provider
    • Legal opinion for the cryptobusiness
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    Advanced

    Set up of company ready to start cryptocurrency operational activity

    • Company formation in Bermuda
    • Individual AML/KYC policies
    • DAB application submission
    • Address of registration for 1 year
    • Full communication with the BMA
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    Basic

    Creating the company and obtaining a cryptolicense

    • Company formation in Bermuda
    • Standard AML/KYC policies
    • DAB application submission
    • Address of registration for 1 year
    Order now

    Our Experts in this Area

    Ganna Voievodina

    Ganna Voievodina

    CEO, co-founder
    LinkedIn anna.v@manimama.eu
    Artem Shapoval

    Artem Shapoval

    Senior Lawyer
    LinkedIn a.shapoval@manimama.eu
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    Step by Step Description

    1. Step 1. Initial setup

      • Initiating a preliminary project assessment
      • Preparation and filing of the package of documents

    2. Step 2. Pre-registration preparation

      Application for non-objection from the BMA, and preparation of the legal documentation to incorporate the Company

    3. Step 3. Company registration

      • Reservation of the company name in Register of companies
      • Preparation and submission of the application to the BMA and requesting a beneficial ownership permit
      • Preparation and submission of the Memorandum of Association to the Registrar of Companies
      • Payment of government fees

    4. Step 4. Opening a bank account

      After company incorporation, we can help open a corporate bank account

    5. Step 5. Obtaining a license

      • Submitting an application for a license along with relevant supporting documentation. Application can be emailed to FinTech@bma.bm
      • The applicant must ensure that all documents, as well as determine in advance the class of license to be obtained
      • The BMA will also check the applicant for compliance with the minimum criteria
      • The application will be presented to the Assessment and Licensing Committee, which will make the final decision on the issuance of a license
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    Understanding Requirements in Bermuda

    The BMA offers three types of cryptolicenses that enable entities to conduct activities that fall under the DABA

    The BMA offers three types of cryptolicenses that enable entities to conduct activities that fall under the DABA:

  • Class F license - it is a full license to operate as a regulated DAB in Bermuda. This license does not have an expiration date; however, it is subject to regular supervisory visits by the BMA`s FinTech supervisory unit, Anti-Money Laundering unit and Cyber Risk unit. A full licensee must meet all of the minimum licensing criteria as detailed in the DABA and any additional conditions set forth by the BMA.
  • Class M license - it is a modified license that is designed to allow entities to transition from testing a proof-of-concept under a T license (or other testing environments) to become a Class F licensee. During the M license period, the financial institution develops its compliance programme to ensure its effectiveness at scale. The licensee, therefore, should prepare a roadmap and submit key indicators to evaluate the growth of the business, its risk and its compliance with policies and procedures. This license typically has a duration of 12 months and is subject to certain restrictions imposed by the BMA and supervisory visits from the BMA. Towards the cessation of the license, the BMA and the DAB will discuss the next steps. This will include whether the DAB has demonstrated its ability to maintain an effective compliance programme and has met the minimum licensing criteria for a Class F license.
  • Class T license - it is a testing license to evaluate a novel business model, a minimum viable product or service, or run a pilot in or from Bermuda. This license has an initial duration period of 3 to 12 months, with the potential for extension, and is subject to certain restrictions imposed by the BMA. Prior to the T license expiration, the licensee and the BMA typically meet to discuss the next steps in terms of licensing (i.e. the class of licence the licensee intends to seek next) or if it intends to wind down the operations.
    • Sandbox environmentRegular environment
    Licence classClass T (test)Class M (modified)Class F (full)
    Business model maturityTesting and piloting a business model, a product or a service/which is still unproven generally or in a specific contextScaling up a business model that has previously been tested and building a full compliance programmeRunning a proven business model at scale with a fully developed compliance programme
    Limitations on licenceVery limited scale, pre-set number or category of participantsLimited scale or volume of businessUsually none
    SupervisionLimited reporting, important emphasis on disclosure of risks and limitations of a test to prospective customersMonthly supervisory meeting and returns with predetermined key indicatorsYearly annual returns with on-site supervision
    Minimum net assets$10,000$100,000$100,000+
    Insurance requirementsNoYesYes
    Head office requirementsLocal incorporation onlyProportional expectations as the licensee grow in scale and complexityYes
    DurationThree to 12 months with the potential to extend12-24 months with the potential to extendNo predetermined duration
    Application filing costReduced to $1,000$2,266$2,266
    Licence cost (annual for F or the predetermined period for M and T)Reduced to $1,000Regular fee structure appliesRegular fee structure applies

    Requirements for Obtaining a Cryptolicense in Bermuda

    Every licensed company, other than a licensed company granted a class T licence, shall maintain a head office in Bermuda

    Requirements for obtaining a cryptolicense:

  • at least 1 shareholder in the company
  • a minimum of 2 directors
  • every person who is, or is to be, a controller or officer of the licensed company is a fit and proper person to hold the particular position which he holds or is to hold
  • the licensed company shall conduct its business in a prudent manner
  • the business of the licensed company must be carried on with integrity and the professional skills appropriate to the nature and scale of its activities
  • the licensed company shall implement corporate governance policies and processes as the BMA considers appropriate given the nature, size, complexity and risk profile of the licensed company
  • appointment of a Compliance Officer, who must be at the managerial level, and MLRO. The MLRO is not required to be a member of the senior management. The compliance officer and MLRO may be the same individual
  • appointment of a senior representative
  • the following documents must be filed: Cybersecurity report, Annual return, Audited financial statements, Financial accounts, Certificate of Compliance
  • every licensed company, other than a licensed company granted a class T licence, shall maintain a head office in Bermuda

    • The following documents are required for obtaining a cryptolicense:

  • Completed application form, where will be provided such information as the class of license - a class F license, a class M license and T license
  • Business Plan
  • Particulars of the applicant’s arrangements for the management of the business
  • AML/CFT policies and procedures to be adopted by the applicant
  • An application fee of US$1,000 or US$2,266, depending on the class of license
  • Other necessary policies and procedures (e.g. cybersecurity, insolvency)
  • Such other information and documents as the BMA may reasonably require

    • Taxes in Bermuda

    Bermuda has no income tax, capital gains tax, withholding tax, value added tax or other taxes imposed on cryptocurrencies or any transactions in cryptocurrencies

    Bermuda has no income tax, capital gains tax, withholding tax, value added tax or other taxes imposed on cryptocurrencies or any transactions in cryptocurrencies.

    Exempted companies or limited liability companies engaged in the business of cryptocurrencies, including issuers of digital assets, may apply to the Minister of Finance for a declaration that if any legislation is enacted in Bermuda imposing a tax on income, gains, any capital asset, capital gains, the imposition of any such tax will not apply to them or any of their transactions.

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    Frequently Asked Questions

    • What are the benefits of obtaining a cryptolicense in Bermuda?
      Bermuda offers regulatory clarity, a favorable tax regime, and quick market entry, making it an ideal jurisdiction for crypto businesses.
    • How long does it take to obtain a crypto license in Bermuda?
      The process typically takes about three months, thanks to a streamlined and efficient regulatory framework.
    • What is the regulatory framework in Bermuda for crypto businesses?
      Bermuda operates under a strong regulatory framework based on common law, ensuring compliance with international standards.
    • Are there tax benefits for crypto businesses in Bermuda?
      Yes, Bermuda offers significant tax advantages, including no corporate income tax, capital gains tax, or dividend withholding tax.
    • Can foreign companies obtain a crypto license in Bermuda?
      Yes, foreign companies can operate as exempted companies and benefit from specific tax exemptions in Bermuda.
    • What is the process for applying for a crypto license in Bermuda?
      The process involves submitting detailed applications, undergoing background checks, and demonstrating compliance with regulatory standards.
    • What types of licenses are available for crypto businesses in Bermuda?
      Bermuda offers 3 types of licenses, including Class T (test), Class M (modified), Class F (full) licenses.
    • How does Bermuda support the growth of blockchain and digital assets?
      The government has implemented initiatives to foster a supportive environment for blockchain technology and digital assets.
    • What investor protections are in place for crypto businesses in Bermuda?
      Bermuda’s regulatory framework includes stringent investor protection measures, such as disclosure requirements and transparency standards.
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