Craig Swan’s eyes light up and his smile widens as he talks about Bermuda’s ambitions to become the world’s first fully on-chain economy, a move he is sure will create incredible new opportunities for the country’s citizens.
In an interview with CoinDesk in London, Swan, chief executive of the Bermuda Monetary Authority (BMA), spoke of his small island nation’s huge plans.
“We held a big event in Bermuda to educate our citizens on how to set up their crypto wallet, and we launched $100 in Circle’s USDC stablecoin, and showed them how to use it for purchases, transfer it or send it to friends and family or convert it and even convert it to fiat currency if they wanted to,” Swan said.
The experiment was designed to incorporate local vendors and the public simultaneously, Swan added. Attendees were able to immediately test the ecosystem in an on-site marketplace, using their newly minted stablecoins to purchase products, while payment processors like MoneyGram provided immediate conversion to paper currency.
Driving demand at the DMV
While the emerging market served as a testing ground, the BMA and the Bermuda government are already expanding infrastructure to make it blockchain-ready. The island nation has amended its legislation to officially accept digital assets for public taxes, starting with its largest public sector.
“We’re starting in a high-volume area,” Swan explained. “Starting with the Department of Motor Vehicles, because most people have a car or a license. We’re going to move that to the government itself.”
Financial migration represents the real-world execution of a roadmap first presented at the World Economic Forum in Davos, where the Bermuda government announced a partnership with Circle and Coinbase to build the infrastructure for the world’s first fully on-chain economy. Circle deployed its Circle Mint infrastructure to power government digital treasuries, while Coinbase promised its engineering rails to streamline consumer and institutional onboarding.
Bermuda also recently announced a third major partnership. This time with Stellar for the upcoming launch of its official digital Bermuda dollar, a sovereign-grade stablecoin. Instead of competing with the traditional financial sector, Swan said he expects on-chain rails to coexist with traditional banks, which will continue to hold the fiat reserves that back digital tokens and provide localized custody.
“Reliance on legacy payments infrastructure has left Bermudians paying high fees and hampered additional economic growth,” Premier E. David Burt said following Stellar’s announcement. By riding the rails of blockchain, Bermuda is attempting to avoid the costly intermediary banking circuits that eat into thin trading margins, while keeping capital circulating natively on the island.
However, moving a national economy to a blockchain requires rewriting more than just banking rules, Swan said, noting that it requires changing the definition of ownership.
“When you look at contract law and securities law, in some cases it’s not clear whether or not a smart contract satisfies a legal transfer of ownership,” Swan observed. “We need to review the legislation to make sure it is aligned. I think there are some adjustments the island needs to make around shares – the way the legislation records a share register needs to make it clear that it can exist in digital form.”
Regulating the wave of AI agents
Historically, Bermuda’s testing programs have produced massive macroeconomic results, Swan said. The island is currently among the three largest reinsurance centers in the world. The government is betting that its regulatory framework, the Digital Asset Business Act (DABA), can achieve the same global footprint for tokenized real-world assets (RWA) and decentralized finance (DeFi).
To demonstrate this, Swan said the BMA recently concluded a pilot program focused on embedding compliance directly within smart contracts. The test successfully demonstrated that the protocols could automatically freeze a transaction if the underlying collateral reserves fell below a specific threshold or completely block and exchange if an address violated sanctions monitoring or anti-money laundering in real time.
To address these risks, Swan said the BMA is already looking beyond human traders towards digital liquidity generated by automated machines. With this, he said, the BMA plans to implement an AI payments center to investigate and monitor transactional flows initiated entirely by autonomous software.
For the largest G20 nations, expanding such an ambitious ledger remains a multi-year regulatory bottleneck. For Bermuda, its small population is its main geopolitical advantage.
“Smaller jurisdictions with resources will be able to follow,” Swan concluded, offering advice to other sovereign states looking to digitize their financial architecture. “Larger jurisdictions would have to take a different train. But to attract serious companies, it is better not to rush to the bottom.”
