Bermuda Monetary Authority publishes draft rules for cryptocurrency custody

The Bermuda Monetary Authority (BMA) last month released a draft Code of Practice for Digital Asset Custody for consultation.

According to the official release dated December 18, 2018, the code prescribes measures to ensure “a high level of care when safeguarding client’s assets.” Comments on the draft code should be sent by 18 January 2019.

The code defines a standard for operating as a custodian of digital assets, and is to be adhered to by every digital asset business (DAB) that maintains or is responsible for the custody of its clients’ private keys, according to the document. It covers both technology and business controls in specific areas like hot and cold storage, key generation, transaction handling, incident reporting and more.

“Failure to comply with provisions set out in the Code will be taken into account by the Authority in determining whether a licensed DAB is meeting its obligation to conduct its business in a sound and prudent manner in accordance with the Act,” it said.

Moad Fahmi, Senior Advisor, (Supervision) Financial Technology at the Authority, said that the code complements the extensive body of rules for digital asset businesses published by the BMA.

“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,” Fahmi said.

In September 2018, the BMA had released the licensing requirements for digital asset businesses in the country.