After the collapse of FTX in 2022, the Bahamas came under global scrutiny for its lacking crypto regulations. The failure of the $32 billion exchange led to questions about the effectiveness of the country’s regulatory framework and deterred other crypto companies from expanding to the region.
The Bahamas Securities Commission recently announced the passing of the Digital Assets and Registered Exchanges Act, 2024 (DARE 2024) in an effort to provide clarity and regulation to the digital assets industry within the country. This new legislation aims to not only protect investors but also promote responsible innovation in the sector, positioning The Bahamas as a leader in digital asset regulation worldwide.
Key Features of DARE 2024
DARE 2024 expands the oversight of regulated digital asset activities to include advisory and management services, as well as digital asset derivatives and staking services. The law also imposes stricter requirements on digital asset exchanges to ensure consumer protection and establishes a comprehensive framework for digital asset custody and custodial wallet services. Additionally, DARE 2024 sets clear definitions and guidelines for staking services, stablecoins, and NFTs, and mandates timely disclosure and financial reporting.
Under DARE 2024, the issuance of algorithmic stablecoins and privacy tokens is prohibited, and certain restrictions are placed on Proof-of-Work (PoW) token mining activities in the country. The legislation aims to address conflicts of interest and relationships with connected third parties, categorizing NFTs as financial or consumer assets to ensure proper oversight.
With the introduction of DARE 2024, The Bahamas seeks to rebuild its reputation as a trustworthy and secure destination for the digital assets industry. By implementing stringent regulations and proactive measures to protect investors and consumers, the country aims to attract new businesses and investors to its burgeoning crypto sector. The passage of this legislation marks a significant step towards establishing The Bahamas as a leading jurisdiction for digital asset regulation on a global scale.
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