Bermuda DABA Licensing Explained: What a Class M License Means

Why Bermuda Matters to Institutional Counterparties

Bermuda was among the first jurisdictions to write a dedicated statute for digital asset businesses rather than fit them into existing categories. The Digital Asset Business Act 2018 gives the Bermuda Monetary Authority (BMA) the power to license, supervise, and enforce against businesses conducting digital asset activities in or from the island. For an institution evaluating a counterparty with a Bermuda entity, the Act defines what a license means, what it covers, and how to verify it.

What the Act Covers

DABA applies to digital asset business carried on in or from within Bermuda. The defined activities include issuing, selling, or redeeming digital assets; operating as a payment service provider business using digital assets; operating a digital asset exchange; providing custodial wallet services; and providing market-making, trading, or other digital asset services. A business conducting those activities needs a license from the Authority and becomes subject to its supervisory regime, which addresses governance, the protection of client assets, cybersecurity, anti-money-laundering and counter-terrorist-financing controls, and reporting.

License Classes

The Act provides for license classes with different scope and conditions. A Class F license is a full license. A Class M license is a modified license, granted for a defined period and subject to restrictions and conditions the Authority sets, under which a business conducts licensed activities with supervision tailored to its stage and risk. The Act was later amended to add a Class T test license for businesses conducting limited activities during a testing phase. Which class a business holds, and under what conditions, is a matter of public record.

Supervision in Practice

A licensed undertaking reports to the Authority, maintains the governance and control functions the regime requires, and is subject to inspection and enforcement. The Authority publishes a register of licensed undertakings and a list of public warnings about entities that falsely claim licensing or affiliation. In Oct 2024, for example, the Authority warned about a fraudulent website mirroring the details of Stillman Digital Bermuda Ltd., a licensed undertaking, which illustrates both the risk of impersonation and the use of the warning list in due diligence.

What a License Tells an Institution

A DABA license identifies the exact Bermuda legal entity, the activities it is licensed to conduct, and the supervisory framework it operates under. It does not cover that entity's affiliates in other jurisdictions, which hold whatever registrations or licenses apply where they operate; a U.S. affiliate, for instance, may be registered with FinCEN as a money services business. Institutions map each entity they will face to the status it holds, verify each with the relevant regulator, and record what each covers.

How Class M Conditions Work in Practice

A modified license is not a lesser license so much as a scoped one. The Authority attaches conditions that fit the business: restrictions on the activities it may conduct or the clients it may serve, additional reporting or capital requirements, and a defined period after which the undertaking applies for a full license, seeks renewal, or winds down the licensed activity. The conditions are set case by case, which is why an institution reads the register entry rather than assuming what a Class M license permits.

For the licensed business, the practical consequences are continuous. It maintains the governance and control functions the regime requires, files what the Authority asks for, notifies the Authority of material changes, and operates within the conditions on its license. For a counterparty, those obligations translate into a supervised entity with a defined scope, a regulator to verify against, and a public record of any enforcement action.

Verifying a License

Check the exact legal name against the Authority's register, confirm the license class and any published conditions, review the public warning list, and ask the counterparty to confirm which entity you are contracting with and which activities that entity is licensed for. Then treat the license as one input to counterparty due diligence alongside execution quality, settlement terms, custody controls, connectivity, and reporting.