Crypto Firms Fleeing US Regulation Target Bermuda 

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Key facts:
  • Regulatory pressure in the US drives the search for regulatory clarity in other countries.
  • Bermuda’s short geographic footprint could make it difficult for companies to migrate.

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The regulatory pressure that exists in the United States against some companies that are part of the bitcoin (BTC) ecosystem and cryptocurrencies, has pushed companies in the sector to locate new destinations to settle. Bermuda seems to be the clear target of these institutions. 

Lawyer Phil Berg, head of the corporate department at law firm Otterbourg, sees Bermuda in the North Atlantic as a “hotspot” for US cryptocurrency companies looking to relocate. 

Speaking to an American media outlet, the lawyer indicated that, with the recent authorization granted to Coinbase in Bermuda, companies that want to replicate the action “can stick a finger in the water.   

As CriptoNoticias reported at the beginning of May, the second-largest exchange by trading volume, Coinbase, received regulatory license approval issued by the Bermuda Monetary Authority. Therefore, it made official the launch of a new international cryptocurrency exchange.  

“(Bermuda) will be a hotspot for companies that choose to relocate,” Berg insisted. He then added that the regulatory “punishment” of the United States has made it attractive for cryptocurrency companies to seek a location with better rules of the game.  

Lawyer Berg suggests that Bermuda could welcome these cryptocurrency companies. He although he clarified that the short geographical space of the island could pose a challenge for the migration of companies. This archipelago has an extension of 53.2 square kilometers and about 70 thousand people live there. 

Berg believes that not all of the US-based cryptocurrency industry can move to this single jurisdiction, even though it appears to have a friendlier regulatory regime for digital assets. 

This regime has at least a five-year period and establishes the assignment of licenses to companies for the issuance, sale, or exchange of digital assets. It also allows companies to operate as providers of cryptocurrency services, such as payment gateways or exchanges.  

Within this licensing regime, there are already several companies in the sector, in addition to Coinbase. The first is Circle, the issuing company of the USD Coin (USDC) stablecoin. They were authorized to operate in Bermuda in 2019. 

It also highlights the company of the ex-CEO of Twitter, Jack Dorsey, Block, as well as its subsidiary Cash App. These companies were licensed to start operations on the island on February 27, 2023.  

The US has punished cryptocurrency companies

The lawyer Phil Berg recalled that the “punishment” received by cryptocurrency companies in the United States at the hands of regulators has been through enforcement actions, investigations and “a kind of refusal on their part to dictate laws ” for the sector. of crypto assets.  

The foregoing, as a sign of the “inability” of US regulators to approve legislation for the ecosystem, in Berg’s opinion.  

In the United States, the main body that has regulated the cryptocurrency sector is the Securities and Exchange Commission (SEC), currently chaired by banker Gary Gensler.  

This institution has targeted cryptocurrency companies. CoinbaseKrakenBinance, and Bittrex exchanges have been some of the companies that have had to deal with SEC allegations, investigations, and enforcement actions.