Quality over quantity
Jun 2026
David Parker of the Bermuda Business Development Agency and David Burt, the region’s Premier, believe the Bermuda Triangle is the relationship between the industry, an independent regulator, and the government. Parker, along with Marnus Kruger of ht.digital, explores how this unified thinking has given Bermuda its reputation as a home to “world-class” digital assets legislation, and why institutions are seeking it out as their Western hub
Image: totajla/stock.adobe.com
David Burt, Premier of Bermuda, and David Parker, head of business development at the Bermuda Business Development Agency (BDA), both believe that the Bermuda Triangle is the relationship between the industry, an independent regulator, and the government. For firms looking to enter the digital assets space through, or from within, the British overseas territory, this philosophy offers a uniquely aligned level of regulatory clarity and a forward-thinking outlook on how DeFi technology can evolve TradFi rails, and its recent decision to transition into an entirely onchain economy is indicative of such a landscape.
Reputation
For such a small jurisdiction state, a key facet in legislative enticement lies in the ability to offer an attractive regulatory framework for institutions looking to enter or expand in the digital assets market.
Parker sees Bermuda as home to “worldclass regulation and legislation” in relation to digital assets. He believes that Bermuda offers “certainty, security, stability, predictability, neutrality” in a geopolitical landscape marked by “volatility”, both as a standalone or parallel digital assets outpost, making the domicile a significant outpost for institutions seeking a presence in the Western Hemisphere.
Bermuda is seen as a natural Western choice, adding another time zone and legal regime to increasingly diversified global footprints.
To become an enticing offering, the government of Bermuda has sought out legislative and market advice from significant institutional players such as Coinbase International and Circle to assist with its onchain economy and broader digital assets landscape. Parker believes that, by onboarding these firms in an advisory capacity, the government is “driving the growth of the ecosystem and bringing tremendous economic value in doing so”.
Marnus Kruger, partner at ht.digital, reiterates that, in having spoken to a range of firms looking to set up and remain in Bermuda, the underpinning attracting factor is its “strong regulatory environment”.
If a large firm, like Coinbase, entrusts the region with handling its blockchain-based assets, that serves as a signal to other institutions that the region carries a large degree of trust. Parker recalls the STS Digital banner at the Digital Asset Summit, New York, which said: “regulated in Bermuda”, with the firm wearing its compliance as a “badge of honour”, in his own words.
Onchain economy
With the proposed plans for the domicile's onchain economy in place, Bermuda has had to confront the difficult questions of how it should hold and move digital money. Kruger highlights the fact that a treasury can either entrust a custodian with its regulated stablecoins or it can opt for self-custody and bear the weight of the operational risk of key loss and misuse, a prospect of amplified pressure when “holding the funds of a state”.
He suggests that this pushes the region towards multi-signature designs and detailed access policies.
“Who’s got control?” and “who can access those funds?” are key questions that Bermuda has had to consider in pursuing its onchain economy.
Reconciliation to ensure there is “not a single penny that’s unaccounted for” is a governance challenge in its own right, Kruger notes. Onchain ledgers offer a unique level of transaction verifiability, but that comes at a cost. Bermudan legislators and government officials must ensure that its digital systems are capable of holding vast amounts of reconciliation data, in order to keep up with the additional layer of blockchain verification.
Bermuda must also grapple with the complexities that could arise from reliance on a stablecoin.
“What happens if that stablecoin de-pegs?” Kruger asks.
“What measures do you have in place to ensure that doesn’t happen?” He argues that the hub’s underlying assets must be of high quality, with a great level of transparency regarding where, how, and what reserves are being held.
Trust
For an auditor like Kruger, the premise of trust is about making it auditable. With blockchain technology, he believes that it offers a level of assurance through a “verifiable, immutable ledger” incomparable to assets on TradFi rails. Data can be extracted directly from a transaction, allowing auditors to know that it has happened, simultaneously stripping out large swathes of fictitious or manipulated entries that have long plagued centralised databases.
Significantly, he says that the human element — a pillar of trust — does not get stripped away by such a technological advancement. Instead, Kruger believes that, for auditors, their job description has changed; they are no longer interrogating whether a transaction took place, but why it did, under which approvals, and with what governance around wallet creation, key management, and access rights.
Under the Digital Asset Business Act, applicants navigating through the regulatory sandbox — progressing from a Class T (Test), to a Class M (Modified), and finally
a Class F (Full) licence — must nominate an approved auditor from the outset and build a finance function that simultaneously understands onchain activity and traditional rules of accounting.
Kruger highlights the fact that firms in the test and modified stages are subject to regular supervisory meetings with the BMA, at which they must present their financial figures, an ongoing discipline that prevents firms from leaving financial reporting “up until the last second”.
The result, he argues, is that firms which reach full authorisation tend to have already invested in the back office infrastructure — data pipelines from blockchains and exchanges, reconciliations, internal controls — that many peers in less structured jurisdictions only scramble to assemble once an audit is unavoidable.
Such a robust level of regulatory oversight, Kruger believes, is a significant piece of core infrastructure. In his experience, early-stage digital asset firms in other regions have a tendency to “forget about their back office and their accounting function for a few years”,
before discovering they are sitting on “three, four years of onchain data that has not been converted into accounting data yet”.
Conversely, he describes better-prepared institutions as ones that recognise “right from the outset” that their work necessitates a comprehensive finance and control environment, with all activity — onchain and offchain — sitting in a central accounting system, “all accurate” and “all complete”.
Bermuda’s onchain experiment, therefore, rests on institutions maintaining their culture of rigorous, continuous assurance as volumes scale.
Quality over quantity
While the premise of an onchain economy may seem bold, and naysayers may say that the scope extends beyond the region of such a tiny island territory, its supervisors are ensuring that they are not chasing scale at any cost. Instead, through comprehensive regulatory and governance frameworks — such as transitioning from the tightlycontrolled Class T to the full Class F licence — the BMA can understand and learn business models before allowing institutions the full financial freedom they seek.
Parker says, explicitly, that, with such a robust regulatory regime, some firms “will not make it to an F licence”, which he adds is intentional, not an error, of a domicile that is “about quality, not quantity” and “does not necessarily need to be home to 1000 exchanges” as long as it can engage credibly with the “top 100 firms globally”.
Kruger notes that, in his view, the real friction of transitioning from a modified to a full licence lies in building on-island governance capacity — anti-money laundering and IT-risk staff, compliance officers, chief financial officers — whose internal controls have the capacity to scale in tandem with rapid growth.
With Europe rolling out its Markets in Crypto-Assets (MiCA) framework, the UK, slowly but surely, pursuing its own crypto reforms, and further pressure within the US for clearer rules, cross-border market accessis, perhaps, likely to hinge on the notion of regulatory equivalence.
Parker argues that Bermuda’s “gold star” framework, built, in part, on its long track record in insurance and reinsurance, should leave it in good standing if foreign supervisors were to impose rules that would require an overseas platform to either meet or exceed their own domestic standards.
“If we get to the point where — to be doing business in the UK and other jurisdictions — you need regulatory equivalence, then I don’t see that as a challenge for Bermuda,” he says.
“If it’s a challenge, it’s potentially a challenge coming in the opposite direction.”
Bermuda’s economic plan is a prospect that certainly grabbed the headlines.
But for institutions seeking a digital assets outpost that they can feel confident in, the sovereign state’s ability to operate at, or above, the bar still being defined by global powerhouses may be even more compelling than any headline about becoming “fully onchain”.
Reputation
For such a small jurisdiction state, a key facet in legislative enticement lies in the ability to offer an attractive regulatory framework for institutions looking to enter or expand in the digital assets market.
Parker sees Bermuda as home to “worldclass regulation and legislation” in relation to digital assets. He believes that Bermuda offers “certainty, security, stability, predictability, neutrality” in a geopolitical landscape marked by “volatility”, both as a standalone or parallel digital assets outpost, making the domicile a significant outpost for institutions seeking a presence in the Western Hemisphere.
Bermuda is seen as a natural Western choice, adding another time zone and legal regime to increasingly diversified global footprints.
To become an enticing offering, the government of Bermuda has sought out legislative and market advice from significant institutional players such as Coinbase International and Circle to assist with its onchain economy and broader digital assets landscape. Parker believes that, by onboarding these firms in an advisory capacity, the government is “driving the growth of the ecosystem and bringing tremendous economic value in doing so”.
Marnus Kruger, partner at ht.digital, reiterates that, in having spoken to a range of firms looking to set up and remain in Bermuda, the underpinning attracting factor is its “strong regulatory environment”.
If a large firm, like Coinbase, entrusts the region with handling its blockchain-based assets, that serves as a signal to other institutions that the region carries a large degree of trust. Parker recalls the STS Digital banner at the Digital Asset Summit, New York, which said: “regulated in Bermuda”, with the firm wearing its compliance as a “badge of honour”, in his own words.
Onchain economy
With the proposed plans for the domicile's onchain economy in place, Bermuda has had to confront the difficult questions of how it should hold and move digital money. Kruger highlights the fact that a treasury can either entrust a custodian with its regulated stablecoins or it can opt for self-custody and bear the weight of the operational risk of key loss and misuse, a prospect of amplified pressure when “holding the funds of a state”.
He suggests that this pushes the region towards multi-signature designs and detailed access policies.
“Who’s got control?” and “who can access those funds?” are key questions that Bermuda has had to consider in pursuing its onchain economy.
Reconciliation to ensure there is “not a single penny that’s unaccounted for” is a governance challenge in its own right, Kruger notes. Onchain ledgers offer a unique level of transaction verifiability, but that comes at a cost. Bermudan legislators and government officials must ensure that its digital systems are capable of holding vast amounts of reconciliation data, in order to keep up with the additional layer of blockchain verification.
Bermuda must also grapple with the complexities that could arise from reliance on a stablecoin.
“What happens if that stablecoin de-pegs?” Kruger asks.
“What measures do you have in place to ensure that doesn’t happen?” He argues that the hub’s underlying assets must be of high quality, with a great level of transparency regarding where, how, and what reserves are being held.
Trust
For an auditor like Kruger, the premise of trust is about making it auditable. With blockchain technology, he believes that it offers a level of assurance through a “verifiable, immutable ledger” incomparable to assets on TradFi rails. Data can be extracted directly from a transaction, allowing auditors to know that it has happened, simultaneously stripping out large swathes of fictitious or manipulated entries that have long plagued centralised databases.
Significantly, he says that the human element — a pillar of trust — does not get stripped away by such a technological advancement. Instead, Kruger believes that, for auditors, their job description has changed; they are no longer interrogating whether a transaction took place, but why it did, under which approvals, and with what governance around wallet creation, key management, and access rights.
Under the Digital Asset Business Act, applicants navigating through the regulatory sandbox — progressing from a Class T (Test), to a Class M (Modified), and finally
a Class F (Full) licence — must nominate an approved auditor from the outset and build a finance function that simultaneously understands onchain activity and traditional rules of accounting.
Kruger highlights the fact that firms in the test and modified stages are subject to regular supervisory meetings with the BMA, at which they must present their financial figures, an ongoing discipline that prevents firms from leaving financial reporting “up until the last second”.
The result, he argues, is that firms which reach full authorisation tend to have already invested in the back office infrastructure — data pipelines from blockchains and exchanges, reconciliations, internal controls — that many peers in less structured jurisdictions only scramble to assemble once an audit is unavoidable.
Such a robust level of regulatory oversight, Kruger believes, is a significant piece of core infrastructure. In his experience, early-stage digital asset firms in other regions have a tendency to “forget about their back office and their accounting function for a few years”,
before discovering they are sitting on “three, four years of onchain data that has not been converted into accounting data yet”.
Conversely, he describes better-prepared institutions as ones that recognise “right from the outset” that their work necessitates a comprehensive finance and control environment, with all activity — onchain and offchain — sitting in a central accounting system, “all accurate” and “all complete”.
Bermuda’s onchain experiment, therefore, rests on institutions maintaining their culture of rigorous, continuous assurance as volumes scale.
Quality over quantity
While the premise of an onchain economy may seem bold, and naysayers may say that the scope extends beyond the region of such a tiny island territory, its supervisors are ensuring that they are not chasing scale at any cost. Instead, through comprehensive regulatory and governance frameworks — such as transitioning from the tightlycontrolled Class T to the full Class F licence — the BMA can understand and learn business models before allowing institutions the full financial freedom they seek.
Parker says, explicitly, that, with such a robust regulatory regime, some firms “will not make it to an F licence”, which he adds is intentional, not an error, of a domicile that is “about quality, not quantity” and “does not necessarily need to be home to 1000 exchanges” as long as it can engage credibly with the “top 100 firms globally”.
Kruger notes that, in his view, the real friction of transitioning from a modified to a full licence lies in building on-island governance capacity — anti-money laundering and IT-risk staff, compliance officers, chief financial officers — whose internal controls have the capacity to scale in tandem with rapid growth.
With Europe rolling out its Markets in Crypto-Assets (MiCA) framework, the UK, slowly but surely, pursuing its own crypto reforms, and further pressure within the US for clearer rules, cross-border market accessis, perhaps, likely to hinge on the notion of regulatory equivalence.
Parker argues that Bermuda’s “gold star” framework, built, in part, on its long track record in insurance and reinsurance, should leave it in good standing if foreign supervisors were to impose rules that would require an overseas platform to either meet or exceed their own domestic standards.
“If we get to the point where — to be doing business in the UK and other jurisdictions — you need regulatory equivalence, then I don’t see that as a challenge for Bermuda,” he says.
“If it’s a challenge, it’s potentially a challenge coming in the opposite direction.”
Bermuda’s economic plan is a prospect that certainly grabbed the headlines.
But for institutions seeking a digital assets outpost that they can feel confident in, the sovereign state’s ability to operate at, or above, the bar still being defined by global powerhouses may be even more compelling than any headline about becoming “fully onchain”.
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