Bermuda To Regulate Initial Coin Offerings

by Mike Godfrey, Tax-News.com, Washington

23 March 2018

Bermuda's Premier and Minister of Finance, David Burt, told the island's parliament last week that his government will shortly release a draft Bill to regulate initial coin offerings (ICOs) in Bermuda.

ICOs are a new and innovative method of crowdfunding businesses, providing an alternative funding model to traditional financing such as commercial lending, venture capital investment, and initial public offerings.

Under the proposed bill, an ICO will be treated as a restricted business activity requiring consent from the Minister of Finance. To secure consent, certain information will need to be provided, including specific details of the ICO operator, information on the key features of the underlying digital assets being offered through the ICO, the target amount to be raised, information on how purchaser data will be collected and stored, and information on how ICO transactions will be monitored and audited.

The draft Bill will also include minimum public disclosure standards applicable to all ICOs. These include mandatory disclosure of certain information related to the issuing company, and the digital asset being offered for sale.

Burt said other regulatory laws will continue to apply and be enforceable to ICOs, including Bermuda's securities laws.

While acknowledging there is concern within Bermuda about digital assets such as Bitcoin, and that governments around the world are wrestling with ever-growing threats related to these new products, Burt said the island cannot remain in its "comfort zone" and miss out on an opportunity to be a world leader in an emerging industry.

He said embracing this new technology with carefully measured regulation could lead to significant benefits for Bermuda, including attracting new companies and capital investment, additional government revenue, and new career, employment, and training opportunities for Bermudians.

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