BMA consults on digital asset custody

The Bermuda Monetary Authority has released a draft code of practice for digital asset custody for consultation that prescribes measures to ensure a high level of care when safeguarding client’s assets.

The consultation period is for one month.

The Digital Asset Business Act 2018 makes provision for digital asset business licences and gives power to the BMA to issue codes of practice to ensure the business is conducted in a prudent manner.

The code seeks to protect the public and to clarify the Authority’s expectations in terms of the custody of digital assets.

The code is a detailed document covering both technology and business controls in specific areas like hot and cold storage, key generation, transaction handling, and incident reporting.

Moad Fahmi, senior advisor, (supervision) financial technology at the BMA, said: “The code complements the extensive body of rules for Digital Asset Businesses published by the BMA. We view custody as an important part of a healthy digital asset ecosystem — one that will encourage quality players to contribute positively to our financial system. We remind stakeholders that the framework was built with the aim of making sure that the core objectives of financial regulation are respected, that is: protecting consumers, ensuring stability of our institutions and maintaining integrity and confidence in financial markets — with a focus on maintaining the highest standards of AML/ATF.”

Craig Swan, managing director, supervision (insurance) at the BMA, said: “This technical publication highlights the quality of the work done by our team at the BMA to build on our cybersecurity acumen as we move to become regulatory leaders in digital assets. It is aligned with the BMA’s 2018 Business Plan objectives of being proactive, comprehensive and forward-looking.”