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’s confident will create fantastic new opportunities for its citizens.
In an interview with CoinDesk in London, Swan, chief executive of Bermuda’s Money Authority (BMA), spoke about his tiny island nation’s huge plans.
“We did a huge event in Bermuda to educate our citizens on how to set up their crypto wallet and we aired $100 in Circle’s stablecoin USDC and showed them how they could use it for purchases, transfer or send it to friends and family or convert it and even convert it to fiat if they chose,” Swan said.
The experiment was designed to incorporate local vendors and the public at the same time, Swan added. Participants were able to instantly test the ecosystem in an on-site marketplace, using their newly minted stablecoins to purchase goods, while payment processors such as MoneyGram provided instant conversion back to paper currency.
Driving demand at DMV
While the pop-up marketplace served as a sandbox, the BMA and the Bermuda government are already scaling the infrastructure to prepare it for blockchain. The island nation has changed its legislation to officially accept digital assets for public taxes, starting with its highest volume 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 driver’s license. We’re going to throw that at the government itself.”
The financial migration represents the real-world execution of a roadmap first unveiled 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 onchain economy. Circle deployed its Circle Mint infrastructure to power government digital treasury accounts, while Coinbase pledged its technical rails to streamline institutional and consumer onboarding.
Bermuda also recently announced a third major partnership. This time with Stellar for the upcoming rollout of its official Bermuda digital dollar, a supreme quality stablecoin. Rather than competing with the traditional financial sector, Swan said he expects the onchain rails to coexist with legacy banks, which will continue to hold the fiat reserves backing the digital tokens and provide localized custody.
“Reliance on legacy payment infrastructure has left Bermudians paying high fees and hindered further economic growth,” Premier E. David Burt noted after the Stellar announcement. By leveraging blockchain rails, Bermuda is trying to bypass the expensive intermediary banking loops that chew up thin trading margins and keep capital circulating on the island.
But moving a national economy onto a blockchain requires rewriting more than just banking rules, Swan said, noting that it requires changing the definition of property.
“When you look at contract law, and if you look at securities, in some cases it’s not clear whether a smart contract satisfies a legal transfer of ownership,” Swan noted. “We need to look at the legislation to make sure it’s aligned. I think there are a few adjustments the island needs to make around shares – the way the legislation registers a share register needs to be clear that it can exist in digital form.”
Regulating the AI agent wave
Bermuda’s test programs have historically produced massive macroeconomic results, Swan said. The island is currently among the world’s three largest reinsurance centers. The government is betting that its regulatory framework, the Digital Asset Business Act (DABA), can achieve the same global footprint for tokenized real assets (RWAs) and decentralized finance (DeFi).
To prove it, Swan said the BMA recently completed a pilot program focused on embedding compliance directly into smart contracts. The trial successfully demonstrated that protocols could automatically freeze a transaction if the underlying collateral fell below a specific threshold or block and exchange completely if an address violated real-time anti-money laundering or sanctions screening.
To address these risks, Swan said the BMA is already looking beyond human traders to digital liquidity generated by automated machines. With that, he said, the BMA plans to roll out an AI payments hub to investigate and monitor transaction flows initiated entirely by autonomous software.
For major G20 nations, scaling such an ambitious ledger remains a perennial regulatory bottleneck. For Bermuda, its small population is its primary geopolitical advantage.
“Smaller jurisdictions with the resources will be able to follow us,” Swan concluded, offering advice to other sovereign states looking to digitize their financial architecture. “Bigger jurisdictions would have to take a different train. But to attract companies that are serious, it’s best not to run to the bottom.”
