New VASP licensing rules affecting recovery in Bermuda – cross-border enforcement

Bermuda's regulatory regime for virtual-asset service providers is tightening. As of early 2026, revised VASP licensing requirements are reshaping how claimants, insolvency practitioners, and referring lawyers can obtain disclosure and freezing relief against digital-asset custodians operating from the island. If your recovery strategy touches Bermuda – either because the VASP is licensed there or because assets are held in accounts linked to a Bermuda-registered entity – the changes matter now.

Stricter licensing conditions mean that regulated VASPs in Bermuda face clearer compliance obligations when served with freezing orders or disclosure orders. That is useful for claimants: a properly licensed VASP has a known regulator, a registered presence, and an obligation to respond to lawful process. The practical window for recovery, however, narrows if assets move before process is served.

This alert covers what changed, who is affected, and what to do next.

What the New Licensing Rules Change for Asset Recovery

Bermuda's updated VASP licensing regime introduces more granular conditions around record-keeping, beneficial-ownership disclosure, and cooperation with legal process. For asset recovery, the significant shift is this: a licensed VASP in Bermuda now operates within a regulatory framework that creates identifiable compliance hooks – points at which a freezing order or a disclosure order can be made to stick.

Before these changes, the position in Bermuda was less defined. A claimant pursuing crypto assets held at a Bermuda-adjacent service provider faced uncertainty about who the regulator was, whether the operator held a licence, and whether compelled disclosure was realistic. The new rules reduce that uncertainty. They do not guarantee cooperation, but they establish the architecture through which a court order becomes enforceable.

A disclosure order against a VASP – the equivalent of a Bankers Trust order applied to digital-asset accounts – now has a clearer target. A licensed operator cannot easily argue it is beyond the reach of Bermuda's courts. That matters when you are trying to trace stolen funds that passed through a Bermuda-licensed exchange on their way offshore.

Who Is Affected by the Bermuda VASP Licensing Update?

The practical effect falls on three groups. First, defrauded principals whose stolen funds passed through or are held at a VASP with a Bermuda licence. Second, insolvency practitioners tracing assets stripped from an estate and routed through digital-asset accounts linked to the island. Third, referring lawyers and litigation funders assessing whether a cross-border freezing order can reach a Bermuda-based custodian.

The update is also relevant in reverse. A VASP that is not yet licensed – or that loses its licence – sits outside the compliance architecture, which can complicate both disclosure and enforcement. Confirming the regulatory status of your target VASP is now a first-day step in any Bermuda-linked recovery.

We regularly advise on matters where the licensing status of an offshore VASP determines whether urgent process is worth filing. The Bermuda changes make that status-check faster and more reliable – but the underlying timing pressure does not change. Assets dissipate; delay narrows options.

For a confidential read on whether your matter is viable, contact info@axiomtracel.com.

What to Do Now: Three Practical Steps

Speed is not optional. A freezing order application in Bermuda is typically made without notice to avoid alerting the defendant, and the gap between discovery and dissipation can be hours rather than days. The following steps apply immediately once Bermuda-linked VASP assets are identified.

• Confirm VASP licensing status. Check whether the operator holds a current Bermuda licence. Licensed entities are subject to compelled disclosure; unlicensed operators require a different approach, potentially involving just-and-equitable winding-up or a receivership application to reach the underlying accounts.
• Preserve on-chain evidence. Public blockchains are transparent. On-chain tracing tools can map wallet addresses linked to the target VASP before any legal process is filed. That evidence supports both a freezing order and a subsequent disclosure order requiring the VASP to identify the account holder.
• Instruct local counsel immediately. Axiom Trace coordinates proceedings with local counsel in Bermuda. The island is a direct jurisdiction for us: we routinely coordinate freezing and disclosure orders with local counsel there, and the new licensing regime makes that engagement more predictable. We provide the cross-border tracing and strategy; admitted local counsel files the application.

A worldwide freezing order obtained in another forum – England and Wales, for example – may also reach Bermuda-based assets, subject to the conditions and safeguards of both courts. In our experience, a parallel or sequential strategy (anchoring relief in a common-law hub while serving the Bermuda-licensed VASP directly) is often the fastest path to an effective freeze.

For more on cross-border enforcement tools relevant to Bermuda matters, see our Cross-Border Enforcement insight hub and our Bermuda jurisdiction guide. For parallel approaches used in neighbouring offshore forums, our analysis of third-party disclosure against banks in Guernsey covers comparable disclosure mechanics.

If assets linked to a Bermuda VASP have already moved, time matters. Request a confidential case review at info@axiomtracel.com.

About Axiom Trace

Axiom Trace is an independent boutique focused on cross-border and crypto asset recovery. We trace assets that have moved across borders or on-chain and coordinate their freezing and recovery – working with defrauded principals, insolvency practitioners, and the lawyers and funders who refer them. We work lawfully and within applicable sanctions regimes, alongside local counsel where proceedings must be filed. We coordinate urgent freezing and disclosure orders with local counsel across forums, including Bermuda, where the updated VASP licensing regime is now an active consideration in every digital-asset recovery we assess. To discuss a matter, contact info@axiomtracel.com.

Disclaimer: This publication is for general information only and is not legal advice, nor a promise or prediction of recovery. No outcome is guaranteed. Asset recovery depends on the specific facts and on the law and procedure of each relevant jurisdiction, where local admitted counsel must act. Axiom Trace assumes no liability for actions taken or not taken based on this material. For advice on your situation, contact info@axiomtracel.com.