Bermuda’s Stablecoin Moment and Stablecoins' Bermuda Moment

On 19 January 2026, on the sidelines of the World Economic Forum in Davos, the Bermuda government announced a partnership with Circle and Coinbase to integrate USDC into parts of its national economy.

Officials framed the initiative as a payments and financial infrastructure upgrade: government-related pilots, merchant acceptance, regulated on- and off-ramps, and public education around digital assets.

Behind the generic language of “digital assets” sits a far more concrete use case — stablecoins as transactional infrastructure. The significance of the move lies less in its immediate economic scale and more in its intent: a government explicitly treating a USD-backed stablecoin as public financial plumbing, suited for wages, tourism spending, everyday services, and cross-border settlement.

As early as 2018, Bermuda enacted one of the world’s first comprehensive digital asset frameworks, the Digital Asset Business Act (DABA), establishing a clear supervisory regime for exchanges, custodians, and issuers. This was followed by a series of additional initiatives over the years, all sharing a common pattern: a pragmatic mindset in which Bermuda never positioned itself as anti-bank or post-fiat. Digital assets were treated as financial services infrastructure, not ideology.

Against this backdrop, stablecoins naturally emerged as the most relevant digital asset category, well suited to Bermuda’s structural realities: a small, open, service-heavy economy; heavy reliance on tourism and cross-border flows; and persistent friction in traditional correspondent banking. Stablecoins do not challenge Bermuda’s monetary sovereignty — they simply modernize an already dollarized system, replacing legacy rails with digital ones.

If accepted, USDC will not be a new currency for Bermuda. It already lives in a dollarized world.

• The Bermudian dollar is pegged 1:1 to the U.S. dollar.
• USD circulates freely alongside local currency.
• Prices, contracts, and balance sheets are effectively dollar-denominated.

That makes Bermuda different from large economies where stablecoins collide with central bank policy. Here, a USD stablecoin is not a threat — it’s a better rail for the same unit of account.

Other Bermudas

Bermuda alone won’t move global numbers. Its nominal GDP is roughly $9 billion. Even if every dollar of local broad money magically turned into USDC, the global stablecoin market would barely notice.

But Bermuda isn’t unique.

There are dozens of “Bermuda-like” economies that share the same structural profile:

• Small or micro jurisdictions
• Officially dollarized or tightly pegged to the U.S. dollar
• Highly dependent on external trade, tourism, remittances, or offshore services
• Chronically underserved by global correspondent banking rails

Some of them are already on this path:

• Cayman Islands — a financial center where “dollars as operating currency” is the default, making stablecoins a natural settlement layer for institutions (even when adoption stays mostly behind the scenes).
• El Salvador — officially dollarized, with broad retail familiarity with USDT alongside its Bitcoin experiment (stablecoins often do the day-to-day work).
• Panama — a de facto dollar economy that has repeatedly discussed crypto and stablecoins primarily as payment instruments, not as monetary policy.
• Bahamas — an early CBDC adopter via the Sand Dollar, yet one where private USD stablecoin usage continues to grow organically.

And the “island digitization” arc extends beyond the Caribbean:

• Palau — ran a USD-backed government stablecoin pilot with Ripple and a digital bond with Soramitsu.
  • Solomon Islands — launched a national digital payment platform, and separately initiated a CBDC proof-of-concept.
• Maldives — another tourism-heavy, island-distributed economy: policymakers have explored CBDC/fintech frameworks (including sandbox-style work), while domestic payment modernization (wallets/QR rails) continues—exactly the type of environment where stablecoins can later become the cross-border settlement layer, without turning monetary sovereignty into a political fight.

Even jurisdictions that start with a CBDC frequently converge on the same operational reality: distribution, compliance, merchant tooling, and UX are not central-bank core competencies. Where currency sovereignty is already limited (dollarized or tightly pegged), the logic shifts toward outsourcing execution to regulated private infrastructure—precisely where stablecoin issuers and exchanges thrive.

Individually, none of these economies are large. Collectively, they form a distinct monetary cluster.

Using a simple, easy-to-verify proxy — GDP ≈ domestic money base (a rough stand-in for M2 in small economies where detailed aggregates are inconsistent) — a set of 20–30 Bermuda-like jurisdictions can plausibly represent a stablecoin growth runway on the order of today’s total stablecoin market cap (i.e., “another market” if adoption compounds across the cluster).

If Bermuda’s project succeeds, “Other Bermudas” may become more than a narrative label — it could turn into a segment definition for stablecoin firms.

Bermuda’s real contribution isn’t volume. It’s precedent.

Can “Other Bermudas” Become the State Path for Stablecoins?

Recent U.S. policy has given stablecoins a decisive tailwind while effectively sidelining retail-facing CBDC ambitions. Even before this shift, the utility and purpose of CBDCs were widely questioned. Once a leading jurisdiction stepped back, momentum faded elsewhere. Many countries quietly paused or scaled down their projects.

Today, the main CBDC drivers are concentrated in a handful of jurisdictions — notably the EU and China, and countries such as Russia and the UAE — where digital currencies are often framed less as evolutionary financial innovation and more as instruments of control, surveillance, or strategic autonomy.

Stablecoins, by contrast, are entering their strongest phase yet.

Adoption by Bermuda-like states adds something stablecoins have historically lacked: state-level credibility without monetary conflict. These jurisdictions do not treat USD-backed stablecoins as a threat to sovereignty, because monetary sovereignty was already delegated or anchored.

If stablecoin issuers and infrastructure providers learn to operate successfully with states in these environments — handling compliance, distribution, taxation, consumer protection, and public-sector integration — the next step becomes clear. They can present a “monetary-neutral” version of stablecoins to larger economies: not as replacements for national currencies, but as regulated, interoperable payment and settlement rails.

In that sense, Other Bermudas may become the training ground where stablecoins learn how to work with states — before states decide they want them at scale.