After the FTX scandal focused the international spotlight on it, the Securities Commission of The Bahamas completes its regulator overhaul.
The Securities Commission of The Bahamas (SCB) published a draft of the Digital Assets and Registered Exchanges (DARE) Bill 2023 on April 25. The sweeping bill will undergo a consultation period with the goal of enacting it by the end of the quarter.
The 2023 bill updates the DARE Act of 2020. Work on the bill began in April 2022, with the Hogan Lovells law firm engaged to draft it. SCB Executive Director Christina Rolle said:
“Once passed, DARE 2023 will be among the most advanced pieces of digital asset-legislation in the world and will align with The Bahamas’ commitment to facilitating development and innovation in a well-regulated environment.”
Among other things, the bill expands the scope of regulated business activities to include digital asset advising and management, derivative services, node services and staking. It sets requirements for exchanges’ systems and controls and regulates custodial wallets and initial token offerings.
The bill also provides a “first-of-its-kind” disclosure regime for digital asset staking. Terms of the client agreement, details of the staking protocol, the assets being staked, the rewards or penalties a user might earn and the method for selecting staking participants must all be disclosed.
The bill bans the issuance of algorithmic stablecoins and privacy tokens in the country and touches on nonfungible tokens, liquidity requirements, mining and conflict resolution.
Bahamian regulation was subject to international scrutiny after Bahamas-based cryptocurrency exchange FTX went bankrupt in November amid accusations of fraud and corruption. This led to a certain amount of friction between Bahamian regulators and the United States court system as well as the new FTX management.
Comments on the bill can be made through May 31. The SCB hopes the bill will come into force by the end of the second quarter this year.