Bermuda Releases Draft Digital Asset Custody Code of Practice for a Month Consultation Period

    The Bermuda Monetary Authority – also known as BMA – has released a draft digital asset custody code of practice for a consultation. The main intention behind this release is to provide better regulatory standards to an industry that is searching for legal clarity around the world. The information was released on December 21st by Abacus Journal.

    The draft code is related to the standards that the BMA will be imposing to companies dealing with client’s cryptocurrencies. Firms that are not able to be compliant with these standards will be under investigation regarding their business.

    There are different issues that are addressed by this code of practice related to virtual currencies.

    The BMA will be imposing a proportionality principle. In this case, if there is a company with very high risk or with a very unique business, it might be possible for the regulatory agency to increase the standards used to evaluate this firm.

    An important topic is related to the way in which companies must hold their customer’s funds. The BMA recommends having a minimum balance kept in hot storage and the main balance in cold storage wallets. This would allow firms to have clients’ funds protected against any problem such as hacks or attacks.

    The Coincheck cryptocurrency exchange in Japan experienced a hack on its NEM (XEM) tokens earlier this year due to the fact that they did not hold the virtual currencies in a cold storage wallet.

    Exchanges and platforms will also have to develop a fraud detection protocol that would allow them to detect transactions that are suspicious. Furthermore, these companies will also have to document policies and procedures to client identity verification requirements. Several countries impose exchanges to have a strong Know-Your-Customer (KYC) system.

    About proof of asset valuation and reserve Abacus Journal wrote about the draft:

    “The draft code mandates that digital asset business have to disclose the methodology related to its asset valuation calculations and, when possible, use recognized benchmarks or observable, bona-fide, arms lengths market transactions.”

    Firms should also have controls in place to ensure that digital assets are securely created and sored. Moreover, is necessary for the business to perform an regular internal audit of the backup seeds. Furthermore, these companies will have to demonstrate that clients have perpetual access to all assets in custody in case the business shuts down its operations.

    There are different countries that are trying to create better regulatory systems for virtual currencies and blockchain technology companies. Countries such as Japan, Malta or Switzerland are already ahead of other nations in terms of crypto-regulations. It seems that Bermuda wants to also improve its legal framework.

    Get Free Email Updates!

    *Action* Enter Best Email to Get Trending Crypto News & Bitcoin Market Updates

    I will never give away, trade or sell your email address. You can unsubscribe at any time.

    Bitcoin Exchange Guide News Team
    B.E.G. Editorial Team is a gracious group of giving cryptocurrency advocates and blockchain believers who want to ensure we do our part in spreading digital currency awareness and adoption. We are a team of over forty individuals all working as a collective whole to produce around the clock daily news, reviews and insights regarding all major coin updates, token announcements and new releases. Make sure to read our editorial policies and follow us on Twitter, Join us in Telegram. Stay tuned. #bitcoin

    [Alert] Use the author's self-conducted information at your own risk, do you own research, never invest more than you are willing to lose.

    [Disclosure] The published news and content on BitcoinExchangeGuide should never be used or taken as financial investment advice. Understand trading cryptocurrencies is a very high-risk activity which can result in significant losses. Editorial Policy \\ Investment Disclaimer


    Please enter your comment!
    Please enter your name here


    Live Bitcoin Price & Latest BTC Chart News

    Today's Latest Crypto News

    Open Interest on CME Bitcoin Futures Outgrowing BTC Price

    If BTC closes above the 200-day moving average, just above $9,000, we could see $10k Institutional investors leading the way for a new...

    Here’s How DeFi’s Smashing Growth Puts a Trillion-Dollar Case for Ethereum

    Total USD value locked in DeFi surpasses $800 million creates “a new paradigm for global finance” with one common theme Ether The trillion-dollar...

    This Uncannily Accurate Bitcoin Chart from Dec. 2018 Predicts a New ATH in 2020/21

    Analyst ‘s post from Dec. 2, 2018, correctly predicts Bitcoin’s bottom and momentum in 2019 Bitcoin price is currently hovering around $9,000 after surging...

    Lawmaker Proposes Bill For State-Chartered Institution For Blockchain & Crypto Innovations

    An Oklahoma lawmaker has come forward with the proposition of creating a financial institution chartered by the state and that functions as a central...

    Block.One's ‘Voice' Social Network Has An Open Door Policy To Other Blockchains, Not Just EOS

    During its June ICO, had indicated that its Facebook rivaling social network dubbed Voice, would be launched on the EOS network. However, plans...

    BitcoinExchangeGuide is a hyper-active daily crypto news portal with care in cultivating the cryptocurrency culture with community contributors who help rewrite the bold future of blockchain finance. Subscribe on Google News, see the mission, authors, editorial links policy, investment disclaimer, privacy policy. Got News? Contact us, we are human too. Note: nothing here is financial advice, do your own research thoroughly.