In a move to revamp its digital assets industry, The Bahamas Securities Commission recently announced the passage of the Digital Assets and Registered Exchanges Act, 2024 (DARE 2024). This legislation comes nearly two years after the collapse of FTX, a major exchange headquartered in the country. The goal of DARE 2024 is to establish regulatory clarity and reinforce The Bahamas’ reputation as a crypto-friendly jurisdiction. Christina Rolle, the executive director of the Securities Commission, emphasized that this new law sets a high standard for digital asset regulation and highlights the regulator’s dedication to effective risk management.
Following the abrupt demise of FTX in 2022, The Bahamas came under global scrutiny. The exchange, once valued at $32 billion, was led by the now incarcerated Sam Bankman-Fried, who was considered a prominent figure in the industry. The incident raised doubts about the adequacy of the country’s crypto regulations and led to a decrease in the number of crypto firms choosing to operate in the region. In response to these challenges, DARE 2024 expands the oversight of digital asset activities to encompass advisory services, management services, and derivatives trading.
One of the significant aspects of the new law is the enhanced protection for investors and consumers participating in digital asset markets. DARE 2024 imposes stricter requirements on digital asset exchanges to safeguard the interests of stakeholders. Moreover, the legislation establishes a comprehensive framework for the custody of digital assets and custodial wallet services, ensuring greater security and transparency in these operations. The law also addresses emerging trends in the industry by providing guidelines for staking services and stablecoins, setting out registration procedures, reserve policies, and disclosure obligations.
DARE 2024 categorizes non-fungible tokens (NFTs) as either financial or consumer assets, reflecting the evolving landscape of digital asset ownership. In a move to mitigate potential risks, the law prohibits the issuance of algorithmic stablecoins and privacy tokens. Furthermore, it imposes restrictions on Proof-of-Work (PoW) token mining activities within the country, aligning with global concerns about the environmental impact of such practices.
The introduction of DARE 2024 marks a significant step towards revitalizing The Bahamas’ digital assets sector and restoring confidence in its regulatory framework. By prioritizing investor protection, responsible innovation, and compliance with international standards, the country aims to position itself as a leader in digital asset regulation on the world stage.
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