Recently, The Bahamas Securities Commission announced the passing of the Digital Assets and Registered Exchanges Act, 2024 (DARE 2024). This legislation comes nearly two years after the collapse of FTX, a major crypto exchange headquartered in the country. The collapse of FTX raised questions about the effectiveness of the nation’s crypto regulations and caused a decline in the number of crypto companies operating in the region.
The main goal of DARE 2024 is to provide regulatory clarity for the digital assets industry in The Bahamas. The executive director of the Securities Commission, Christina Rolle, emphasized that the new legislation sets a new standard in digital asset regulation and demonstrates the regulator’s commitment to robust risk management. The framework established by DARE 2024 focuses on investor protection while also encouraging responsible innovation.
Key Provisions
Under DARE 2024, the scope of regulated digital asset activities has been expanded to include advisory and management services. The legislation also covers digital asset derivatives, staking services, and other evolving activities in the industry. The law imposes stricter requirements on digital asset exchanges to enhance investor and consumer protection. Additionally, DARE 2024 establishes a comprehensive custody framework for digital asset custody and custodial wallet services.
One of the significant aspects of DARE 2024 is its clear definitions and guidelines for staking services and stablecoins. The legislation outlines the registration process, asset reserve policies, custody management, and financial reporting requirements for stablecoins. Furthermore, the law addresses conflicts of interest, relationships with third parties, and categorizes NFTs as financial or consumer assets.
Limitations and Restrictions
Despite its advancements, DARE 2024 also imposes certain limitations. The legislation prohibits the issuance of algorithmic stablecoins and privacy tokens. Additionally, it places restrictions on Proof-of-Work (PoW) token mining activities within the country. These restrictions aim to prevent potential risks and ensure the stability and security of the digital assets market in The Bahamas.
The passing of DARE 2024 is a significant step towards re-solidifying The Bahamas as a pro-crypto hub. The legislation not only enhances regulatory clarity and investor protection but also promotes responsible innovation in the digital assets industry. By addressing the shortcomings exposed by the collapse of FTX, The Bahamas is positioning itself at the forefront of digital asset regulation globally.
