The ‘Bermuda Triangle’ Approach to Innovation and AI as the Next Regulatory Frontier

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1. 0:10

   All right, good afternoon colleagues. Hope you enjoyed your lunch. Hope you're feeling full. My name is G Clay Miller. I am a partner at the digital asset firm Penrose and I also get to serve as the digital finance adviser to the government of Bermuda. This is my third NearCon, my team's third Nearcon after Lisbon and Bangkok. So, I'm very excited to be back here with you all in San

2. 0:33

   Francisco. Quick show of hands. How many of you have been to Bermuda before? Okay, we got a handful. That's great. Well, I'm sure after you hear the conversation with this gentleman, the Honorable E. David Burke, Premier of Bermuda, you'll all want to visit. Our premiere has a background in tech with a masters in information systems. He was previously an entrepreneur before becoming Bermuda's youngest premier in

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   history. And he is now in his final term, having recently come off his third election victory in a landslide win. And over the last seven years, has made significant milestones and accomplishments in our digital asset industry. Let's give him a big round of applause.

4. 1:17

   Y'all are too kind. I feel like I'm the only one here in this place in a suit, but we'll make it work. All right, let's get started from here. So, you've been championing digital assets since 2017, well before they were broadly accepted by institutions and governments. Why did Bermuda take that leap so early? And as you look back, how has this journey evolved from experimentation to now what we call production grade financial infrastructure?

5. 1:40

   Well, thank you very much, G. Um, and the journey has been long. Um and it started in 2017 actually not in a proactive measure because I was some type of digital asset maxi. It came from the perspective that the conversations in 2017 around blockchain uh taking and eating up everything. Um and so given a we were a financial services jurisdiction with a heavy concentration insurance and reinsurance and at that time they said those industries would go by the wayside. We wanted to ensure that

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   our companies had the ability to innovate in uh Bermuda and on our shores. And so we started uh the regulations uh there in 2018. I was having a conversation earlier talking about uh that famous consensus um way back in New York in 2018 where we had actually unveiled our digital asset business act and now for the last 8 years we have been regulating digital assets and uh doing a number of things in the digital asset regulation space.

7. 2:37

   But when we talk about moving it to implementation, because we've been doing this for so long, we formed so many various partnerships, a number of things. And last month, while we were in at the World Economic Forum in Davos, I was able to unveil a partnership between Circle, Coinbase, and the governor of Bermuda, making sure that Bermuda became the world's first fully onchain economy, putting money and funding from the government of Bermuda side, while also welcoming uh money and funding from the

8. 3:01

   private sector side. And hopefully we get to talk more about that. Yep, that was an incredible announcement that we made in Davos. And I've got I know we've got some other exciting partnership announcements to make here today. And I know these announcements are particularly important because after years of companies coming to doicile in Bermuda and service international customers, driving local adoption of

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   digital finance has been a top priority for you. So what did that announcement in Davos actually mean for Bermuda and its residents? Well, um that's a great question because a lot of people ask, well, you're going to have an onchain economy. What exactly does that mean? Um it just means that where we're building towards and we have people here near partners etc. We're building towards the future of which we have always envisioned where digital

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    finance or digital assets are just a part of everyday life. And so from a space like Bermuda it is making sure that the promise that many of us got into this industry for and understood the democratization of financial access happened. So we're talking about lower cost for consumers clearly. We're talking about lower cost for businesses.

11. 4:00

    We're talking about the democratization access. So for instance in Bermuda when we're talking about the types of tokenized funds and tokenized insurance products that are there right now those things are mainly only accessible to institutions but we want to make sure those are accessible to retail and having access to digital finance tools allows that and so from our perspective it's really around and also it's the integration of those matters within government as well. So when we're

12. 4:23

    talking about automated reporting um and making sure that we make the I guess tax payments the payments from government more efficient and being handled in that way we basically talking about the full rewiring and the Bermuda perspective is always interesting because we know that companies are not going to come to Bermuda in a way to make a significant amount of money. We're a very small market only 65,000 people. But the way

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    in which we position ourselves globally is we want companies and partners to come and work with a willing government and the best digital asset regulator on the planet to demonstrate how products and services can work at scale in a country and then scale those up to larger jurisdictions which are certainly larger than our 65,000 and on a small island of Bermuda.

14. 5:07

    Precisely. I mean, Bermuda's competitive advantage for so long has been our regulatory innovation and nimleness, and that was a remarkable demonstration of what regulation can make possible at the local level and how it can improve Bermudian residents' lives. Now, looking beyond our shores, we're in seeing important progress on the regulatory uh front globally, especially here in the United States with the passage of Genius and debate of the market structure. I'm

15. 5:32

    happy that they've caught up finally and you know beyond here we're also seeing implementation of Mika and Union and now across the Commonwealth with Canada introducing draft legislation, Australia which has their policy week in early March debating stable coin legislation and of course the United Kingdom. So how does Bermuda's regulatory regime complement these other jurisdictions and how should institutions here think about

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    considering Bermuda in their global strategies? So um I will say this if you are a builder looking to build out a global digital asset company then clearly Bermuda should be a part of your international strategy. No question. But when we speak about the regulatory clarity that is you know possibly emerging in the United States but also uh the regulations that are being put in place around the world. Here's the approach. Bermuda was one of the first.

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    We know that in the European Union um the you know the the Mika regulations and the Mika law etc. a lot of those borrowed from what it is that we're doing. We recognize that we were you know testifying in Congress in 2019 and 2020 around the work and so we know that a number of persons have borrowed from what Bermuda has done because we've certainly given regulatory clarity. I

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    even remember um as far back in 2019 we were asked to present to the OECD to make sure that we could share the work of which we're doing because at that point in time they were trying to figure out how do we regulate this? How do we deal with the AML constructs and concerns that may be a part of this. So from the perspective of what Bermuda has been doing, we've been always sharing our regulatory expertise because we recognize that we cannot be all things

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    to all people. But when we're looking at this from a global perspective, we would certainly welcome more and more jurisdictions to know and to understand and to provide the clarity of which exists. So from our regulatory my regulator perspective, I have no doubt in saying that we have the best digital asset regulator on the planet. We've been doing this for eight years. There are there is nothing that we have not

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    seen. We started from the basis of going on at a very broad basis. Then we giving uh regulatory clarity to lending to staking uh to um other activities which were taking place making sure we gave um regulatory clarity to derivatives and now we're making sure that we're moving on to space with digital identity and others and so we continue to work with global regulators whether or not those are the connections that we have with US regulators educating them on how to

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    regulate these particular matters um also as you said working with the European Union and also um with the um uh uh the United Arab Emirates as well where We've established a regulatory bridge with Abu Dhabi Global Markets borrowing on our expertise because as I said regulators, global regulators know if they want to find out how to regulate digital assets, they should go to the jurisdiction that has been most successful at regulating digital assets and that is Bermuda.

22. 8:23

    Precisely. And I think a great example of that is how Circle, Coinbase, Kraken, all got their initial licenses in Bermuda, started to expand globally, now starting to offer products and testing them across the entire uh ecosystem of Bermuda from individuals, consumers, government, our institutional capital markets. And I know we've got an new announcement that we have today about another partnership just like that. You interested in sharing?

23. 8:48

    Uh which partnership is that? Is that one with near? That's the one. Okay. Well, absolutely. So I mean so the the thing is that what we like to do is that we want to make sure that we demonstrate what these new tools mean in practice and so from this perspective um great to be here at Nearcon as you said it's your third it is my first and happy to be here as well but on the perspective that we are working with near Foundation to launch and deploy within the government of Bermuda a private AI chatbot that will enable

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    interactions for our citizens to go ahead and get particular information. We're starting on one of the most complex problems with one of our public servants and that is matters that are related to pensions and pension calculations which is something that is personal individual to persons but we're looking to make sure we go further and I think it's important that we discuss the opportunity in Bermuda and the

25. 9:35

    opportunity of which we are trying to make sure that happens because from our perspective Bermuda is the home of insurance and reinsurance. We have a significant capital base in Bermuda of $2 trillion. And the real question is how do you make sure that that pool of capital as we call it on the buy side can be a able to be more capital efficient when we're talking about the new types of tools. So I'm happy to lean into that a little bit further.

26. 9:59

    Yeah, absolutely. And we're really excited to be working with NAR as this first government use case for artificial intelligence. But I do want to pivot to your next point, which is the institutional capital markets. So with regulatory clarity, we're now seeing digital assets move mainstream into banking, asset management, reinsurance, and with Bermuda sitting at the intersection of both digital finance and capital heavy reinsurance markets, how do you view the opportunity in connecting these industries? What are

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    the most tangible values being created today? And how do you see artificial intelligence playing a role in the future? So um let me speak on that a little bit further because I think it's helpful and just to take you know a step back when we look at Bermuda's insurance industry we recognize that we have $2 trillion of assets and I just mentioned it's kind of like a buy side when we're talking about where this tokenized funds

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    whether it's other matters but when we look at what the future of digital finance is going to be in a you know buzzword agentic AI society there's is really a question of what is the future of financial services going to look like when it is combined with artificial intelligence. Now from a plain and simple perspective if you're just doing it on a non-institutional basis you can

29. 11:13

    go ahead and play with your various tools etc and connect your agents etc. But if you're looking at it from an institutional perspective, the question is how are these AI agents licensed regulated, how are they going to work? And if they're actually going to be conducting business transactions on behalf of institutions, then how do you make sure that those things are regulated in the right and proper way?

30. 11:36

    So one of the things in which we're doing um is that we um recognize this and I have near to thank for that actually because of the team at near at last year's Nearcon who actually had mentioned to us that there is a space for the regulation of AI agents in financial services and what we have stood up is a task force with both of our legal community and also Bermuda Monetary Authority working through the

31. 12:00

    various complexities around the regulation of artificial intelligence. agents in financial services transactions because the question is if a financial ser if an agent is doing something a um a transaction how is that um regulated um how is that you know insured how do you make sure that it is done proper what happens when there's dispute resolution how do you make sure all those things are handled and so we know that for an institutional basis we

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    need to get that right and that is something in which we're leaning into but that just happens because we have such a deep history of regulatory um expertise not only on the insurance side but on the broader financial services side. And with our track record of innovation, we're able to work with companies who know that they're in our ecosystem that want to test out these particular items. And we also know that we have uh the providers who are um

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    looking at in our innovation hub who want to say this is something that we want to do. Can you help us work with this? Incredible. So this would be another world's first regulatory innovation in Bermuda. What principles can other jurisdictions learn from Bermuda that can help guide their regulatory design and crossber alignment so that AI innovation can scale globally without undermining trust, market integrity or sovereignty?

34. 13:14

    Well, it would be very difficult for other jurisdictions be as small and nimble as Bermuda because we're just a very small and nimble place. So, um I wish them the best at shrinking themselves to being 65 uh,000 persons. But the reality is that from a Bermuda perspective, we have been able to succeed because we are so small and therefore we are so nimble and that is the reason why we've been able to introduce uh these various regulations and provide regulatory clarity at scale.

35. 13:38

    I mean, if I go back to 2017, we announced our a um our at that point in time digital assets task force in November of 2017 and by May of 2018, we had legislation on the books and the legislation was operable by September and stood up with our regulators. So, it's that quick that we're able to work.

36. 13:58

    And if you, you know, look back at the United States and other jurisdictions, it takes them a lot longer. But that is because we have a unique blend which has been honed through many years throughout the insurance sector. It is what we call the Bermuda Triangle. Huh. Play on words. Yes. But from our perspective, this is the uh unique working relationship between the government which is there to sponsor uh laws, the uh industry which tells us what they want and our regulator who will tell the

37. 14:24

    government how to responsibly regulate these particular um aspects. All three play a unique part. And there's a continual feedback loop from industry to the regulator that will then come to the government and say these are the upgrades the regulations and legislation that we want to make in response what industry has come with us. So that is the reason why we're able to get uh regulatory clarity for derivatives.

38. 14:46

    That's the reason why we're able to get regulatory clarity for lending and staking. It is because our industry partners said this is something of which we need. And so the reason I bring that up is if you're part of the Bermuda ecosystem, if there is something that you are having a regulatory challenge with, you can always be a part of our innovation hub with the Bermuda Monetary Authority working with them and saying this is a challenge of which we want to do. Because here's the thing. If you're

39. 15:11

    looking at raising institutional capital, and I'm sure there's people here here that are looking at raising institutional capital, if you're able to get a stamp for approval from the best digital asset regular on the planet, it makes it far more easy to raise money and it gives a lend of a lens of credibility. Um in that aspect when when we're talking about the types of stuff which we're doing going forward um our regulator has already launched an embedded DeFi supervision pilot where we

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    are embedding DeFi supervision or supervision regulatory supervision inside of D5 protocols and this is something that is um a world's first as well because we believe in trying to make sure because we know that there's DI protocols that are looking at understanding how do we do this in a regulated way and so we've done that and then finally our regulator um has an innovation hub and they have now opened

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    up the innovation hub to AI projects to be a part of our innovation sandbox so that they can basically test out and learn and understand because as we move towards that space whether it's the regulation of agents or whether it's regulation of other aspects of financial services transactions powered by uh these particular matters it is around figuring out how we do that in a responsible way and the BMA is ready and

42. 16:20

    willing to um accept those applications for people to be a part of our ecosystem our growing ecosystem. Incredible. Okay, final question, Premiere. What message do you want to leave the industry leaders, innovators, and researchers here working on AI today?

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    Oh, well, that's a big one. What message? Uh, the first message is that Bermuda is beautiful. So, if you've never been there, you should come and visit. That's the first thing. Um, we welcome uh persons and we recognize that we don't market ourselves as well as other jurisdictions do. We um recognize and understand that you know some of the lawyers, the law firms may be sending you to other islands and other places, but I can say without fear of

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    contradiction that the best digital asset regime on the planet is in Bermuda. There is nothing that our regulator has not seen and does not have the ability to do. And what's the thing? You will get an answer yes or no. You won't get stuck in a box. You'll get an answer within four weeks. You'll either say yes, we can do it or no, we cannot.

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    And that is something that I think is important and I think that's something that builders and founders and other persons uh certainly would welcome. Secondly, uh thing is that when while we welcome people to Bermuda, we also every year throw um a digital finance forum that is going to take place this year in May. Um you can leave uh sunny uh San Francisco or from wherever you are and

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    come to wonderful uh sunny Bermuda um from the 11th to the 14th of May. We have a whole summer uh full of events, but that is going to be one of our particular highlights. And the third thing which I will say kind of reprising what I had said before, any company that is looking at going global and wants to have a global footprint, Bermuda should be a part of your digital asset

47. 18:04

    strategy. That is something it is something easy for you to go ahead and look at and explore. Whether or not you have any questions, you can always talk to G. We also have another one of my colleagues, Karem, put up your hand. so everyone can see um there um as uh well as well as myself, the guy in the pink tie and the pink socks. I'm happy to go ahead and direct you uh to our teams. I was having a conversation with someone um uh behind stage uh talking about

48. 18:28

    something and I says I can assure you if your general counsel and your regulatory team were to speak to my regulators, I can assure you within 30 minutes of the conversation their face will look like this because that is the reaction that we get when regulatory teams meet with our regulators. they are actually stunned that they are this level of regulatory clarity for all the advanced applications that people have been trying to build that is actually able to

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    be accomplished in Bermuda. So I want to thank the NAR team for continuing to work with uh Bermuda. I look forward to continuing to engage. We're very excited about the partnership of which we have with NAR and I sincerely hope that we're able to have partnerships with more persons that are part of the NER ecosystem or others. So with that I want to say thank you all very much for your attention.

50. 19:09

    Thank you so much everyone. If you're an entrepreneur looking to participate with our BMA sandbox, please come find us. If you're a researcher looking to contribute to our legislative and regulatory agenda, please come find us.

51. 19:21

    We hope to see you all in Bermuda May 11th to 14th for the digital finance forum. Please give the premier a big round of applause.