The Bahamas Securities Commission recently unveiled the Digital Assets and Registered Exchanges Act, 2024 (DARE 2024) in response to the collapse of FTX nearly two years ago. The passage of this new legislation signals a commitment to providing regulatory clarity for the digital assets industry in the country. Christina Rolle, the executive director of the Securities Commission, highlighted that DARE 2024 sets a new standard in digital asset regulation and emphasizes the importance of robust risk management. The goal of the legislation is not only to ensure investor protection but also to promote responsible innovation, positioning The Bahamas as a leader in digital asset regulation on a global scale.
The collapse of FTX in 2022, which was headquartered in The Bahamas, raised concerns and led to increased scrutiny of the country’s crypto regulations. With the firm’s founder, Sam Bankman-Fried, now in prison, there were doubts about the effectiveness of the existing regulatory framework. This event also caused a decline in the number of crypto companies choosing to operate in the region. In response to these challenges, DARE 2024 expands the scope of regulated digital asset activities to include advisory and management services. It also covers digital asset derivatives, staking services, and other emerging activities in the industry.
One of the key features of DARE 2024 is the imposition of stricter requirements for digital asset exchanges to ensure the protection of investors and consumers. The law also establishes a comprehensive custody framework for digital asset custody and custodial wallet services. Clear definitions and guidelines are provided for staking services and stablecoins, along with detailed registration processes and asset reserve policies. Notably, DARE 2024 addresses conflicts of interest, relationships with third parties, and categorizes NFTs as financial or consumer assets. Additionally, the legislation prohibits the issuance of algorithmic stablecoins and privacy tokens while placing restrictions on Proof-of-Work (PoW) token mining activities within the country.
With the introduction of DARE 2024, The Bahamas aims to enhance its reputation as a crypto-friendly jurisdiction while strengthening consumer protection and regulatory oversight in the digital assets industry. By addressing the shortcomings exposed by the collapse of FTX, the country is taking proactive steps to rebuild trust and attract new investments in the rapidly evolving crypto landscape. The comprehensive framework provided by DARE 2024 lays the foundation for sustainable growth and innovation in the digital asset sector, positioning The Bahamas as a proactive and forward-thinking player in the global regulatory landscape.