The financial watchdog in Bermuda, Bermuda Monetary Authority, has issued guidelines on how firms providing custodial services should handle clients’ digital assets. However, the guidelines are still in a draft state.
The guidelines which the Bermuda Monetary Authority (BMA) has labeled as the ‘Code of Practice for Digital Asset Custody’ is meant to regulate the custody of digital assets.
According to Moad Fahmi, Senior Advisor, Financial Technology, BMA:
The code complements the extensive body of rules for Digital Assets Business published by the BMA. We view custody as an important part of a healthy digital asset ecosystem – one that will encourage quality players to contribute positively to our financial system.
We remind stakeholders that the framework was built with the aim of making sure that the core objectives of financial regulations are respected, that is: protecting consumers, ensuring the stability of our institutions and maintaining integrity and confidence in financial markets – with a focus on maintaining the highest standards of AML [Anti-money laundering ]/ATF [anti-terrorism financing].
The managing director of insurance at BMA, Craig Swan, added that the code will broaden the reach of Bermuda’s cybersecurity team as it seeks to get more involved with digital assets in its move to be ‘proactive, comprehensive, and forward-looking’
Bermuda’s financial watchdog argues that digital assets belonging to clients should be stored separately from those belonging to the firm offering the custodial service.
The draft guidelines are geared towards preventing a repetition of what happened to Mt. Gox Bitcoin exchange which collapsed due to an unclear line between company and clients’ digital assets. Additionally, the draft regulations seek to uproot unfit players in the crypto assets custodial field.
Do you think companies offering digital assets custodial services should separate company and clients’ assets to enhance security?
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