Crypto Firms Plan Pivot to Bermuda Region Amidst US Regulatory Headwind

Updated: 15 May 2023

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The reoccurring scrutiny, harsh regulatory frameworks, and a spate of lawsuits from policymakers in the United States are set to trigger cryptocurrency firms to seek a less bureaucratic jurisdiction like Bermuda, where they can expand and foster innovation.

US Regulations Heats Up: Bermuda License Might Be A New Safe Haven

Cryptocurrencies and their associated digital products and services have experienced exponential growth in recent years.

The suffusing growth trajectory aligns with the rise in regulated financial systems such as exchanges and brokerages built to simplify trading these assets.

However, policymakers, notably in the United States, have made its region a tough ground for pre-existing and new firms to thrive due to harsh frameworks.

Although the $1.14 trillion market capitalization indicates promising developments in the economic sector powered by the underlying technology innovations such as blockchain, U.S. regulators believe it reflects stretched valuations in need of strict scrutiny or significant selloff.

Earlier this year, prominent crypto exchanges such as Kraken and Binance were slammed with litigations by the prestigious Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) over the trade of unregistered securities.

Shortly after, the SEC threatened legal action against Coinbase for regulatory violations. The exchange responded publicly, emphasizing the need for clearer guidelines.

As the U.S. crypto framework grows dark and stormy, associated crypto companies are seeking refuge in more favorable jurisdictions, with Bermuda being the favorite due to clarified and simplistic digital asset rules.

While it is rare for crypto-centric firms to seek offshore operations to leverage clearer regulations, Coinbase looks to set a new paradigm.

Coinbase is the largest and most popular US-based exchange in terms of trading volume. However, the recent legal proceedings with SEC have stirred a need for a jurisdiction switch.

On April 19, the exchange announced its successful acquisition of a monetary license to trade digital assets and explore new products in Bermuda. This step marked a significant milestone in an epic regional transition.

Coinbase just got a license in Bermuda to launch a futures trading service.

Not long before the main Coinbase exchange leaves the USA too IMO unless something changes at the SEC.

— Lark Davis (@TheCryptoLark) April 19, 2023

Financial experts believe this latest development will serve as a catalyst for other crypto firms tired of the headwind of U.S. regulators.

Digital asset platforms can now consider transitioning to Bermuda, an emerging destination that offers a friendly and less bureaucratic framework to pre-existing and start-up crypto companies.

Can the Bermuda Monetary Authority Holistic Approach Influence, Other Crypto Regulators?

Bermuda, a fast-rising self-governing British territory located in the western North Atlantic Ocean, is set to provide a revolutionary holistic approach to digital asset trading policies.

The region is rapidly positioning itself as a premier jurisdiction for crypto firms in search of a friendly and clearer digital asset framework and a cost-effective tax regime.

Bermuda’s calm waters have spurred the interest of crypto firms tired of enduring recurring regulatory turmoil.

The licensing of Coinbase by Bermuda’s Monetary Authority (BMA) and the strategic integration of a task force committed to regulating blockchain operations have reinforced the region’s position as a desirable hub for digital asset innovation.

Bermuda’s glaring effort to establish itself as a haven for crypto firms is touted as a big move by financial experts as it could pay off and play a significant role in developing its sectors.

As the policy framework in the United States continues to deteriorate, Bermuda is expected to thrive and attract more crypto projects and players due to its transparency.

Digital financial experts forecast the emerging crypto hub’s unique and strategic policies to set a new paradigm that will enjoy adoption and permeate both federal and state regulators globally.

The hub boasts a series of well-detailed and efficient frameworks, notably led by its proactive regulator, Bermuda Monetary Policy (BMA).

The BMF issues guidelines for digital assets custodians and virtual currency trading platforms that outline designated requirements.

Additionally, firms will be required to obtain a license from BMA before launching or selling tokens.

The regulatory authority also features efficient-driven measures geared at facilitating the growth of crypto hubs. These measures include a tax-neutral platform, a stable government, flexible corporate structures, and experienced advisory and supportive services.

Nonetheless, if Bermuda can continue on its current path to enticing crypto hub giants, projects, and firms, it will undoubtedly become a dynamic player in the crypto industry.