A Regulatory Blueprint for Tokenisation: the Bermuda Paradigm | Christos Efthymiopoulos & Alessandro Spellanzon

Published (in revised form) on 5th February 2025 in Journal of Financial Supervisors Academy Volume I.

Asset tokenisation - the process of representing real-world assets on a blockchain - is quietly reshaping how financial markets think about ownership, liquidity, and settlement. But as the technology matures, the regulatory frameworks governing it are struggling to keep pace.

Drawing on their direct experience supervising digital asset entities within Bermuda's Financial Authority, the authors, Christos Efthymiopoulos and Alessandro Spellanzon, offer a clear-eyed examination of what tokenisation actually involves, distinguishing between off-chain models, where a physical asset is mirrored on a blockchain, and on-chain models, where the asset exists solely in tokenised form from inception. The difference matters more than it might first appear, carrying significant implications for investor rights, redemption risk, and financial stability.

The article maps both the promise and the pitfalls: fractional ownership, enhanced liquidity, and near-instantaneous settlement on one side; fragmentation, cyber vulnerability, and the potential to transmit volatility from crypto markets into traditional financial systems on the other.

At the centre of the piece is a regulatory question that jurisdictions worldwide are now grappling with, how to govern a fast-moving, borderless technology without stifling it. The authors argue that Bermuda's hybrid framework, blending principled flexibility with clear rules across prudential, conduct, cyber, and AML pillars, offers a compelling blueprint for regulators seeking to strike that balance.

Read the full article here.

This summary is the first in a weekly series curated by Business News Malta, showcasing articles from the Journal of Financial Supervisors Academy (JFSA) Volume I, published September 2025.