The Bahamas Securities Commission recently announced the passing of the Digital Assets and Registered Exchanges Act, 2024 (DARE 2024), marking a significant step towards providing regulatory clarity for the country’s digital assets industry. This move comes nearly two years after the collapse of FTX, a major player in the industry. Christina Rolle, the executive director of the Securities Commission, emphasized that DARE 2024 sets a new standard in digital asset regulation and reflects the regulator’s commitment to robust risk management. The aim is not only to ensure investor protection but also to foster responsible innovation, positioning The Bahamas as a leader in digital asset regulation globally.
The collapse of FTX in 2022, a firm valued at $32 billion, brought global scrutiny to The Bahamas and raised questions about the effectiveness of its crypto regulations. The imprisonment of the founder and CEO, Sam Bankman-Fried, further highlighted the need for stronger regulatory oversight in the country’s digital assets industry. As a response, DARE 2024 expands the scope of regulated 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 enhance investor and consumer protection, establishing clear guidelines for custody management and reporting.
DARE 2024 introduces a comprehensive custody framework for digital assets, including custodial wallet services. It provides definitions and guidelines for staking services and stablecoins, outlining registration processes, asset reserve policies, and custody management requirements. The legislation also mandates timely disclosure and financial reporting, addressing conflicts of interest and relationships with third parties. Notably, DARE 2024 categorizes NFTs as financial or consumer assets and prohibits the issuance of algorithmic stablecoins and privacy tokens. It also imposes restrictions on Proof-of-Work (PoW) token mining activities in the country, reflecting a commitment to safeguarding the integrity of the digital assets market.
The passage of DARE 2024 by the Bahamas Securities Commission represents a significant milestone in the regulation of the country’s digital assets industry. By establishing clear guidelines and requirements for market participants, the legislation aims to enhance investor protection, promote responsible innovation, and solidify The Bahamas’ position as a leading hub for digital asset regulation on the global stage.
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