The Bermuda Monetary Authority (BMA) has introduced a new policy framework that permits captive insurers to hold and use recognised stablecoins within their operations.
The framework applies to limited purpose insurers, including captives, but excludes commercial insurers and captives consolidated into commercial groups.
Captive insurers are now allowed to use approved stablecoins for collecting premiums, paying claims, and holding a portion of their regulatory capital.
Eligible stablecoins must be pegged to fiat currencies, fully backed by cash or highly liquid assets with maturities of 90 days or less, and maintain 1:1 redeemability.
Issuers of these stablecoins must conduct monthly, or more frequent, audits by recognised auditors to verify the adequacy of reserves.
Captives intending to adopt stablecoins are required to submit a business plan amendment and obtain prior approval from the BMA. The policy limits stablecoin holdings to 25 per cent of an insurer’s capital base unless otherwise authorised by the BMA.
Despite allowing the use of stablecoins, captives must continue to report their statutory financials in US dollars.
The BMA confirmes that captives adopting stablecoins under this framework do not need to enter the innovation hub or obtain additional sandbox licences such as IIGB or IILT.
The authority plans to review the framework after 12 months to assess its impact and consider any necessary adjustments.
