The Bahamas Securities Commission has recently approved the Digital Assets and Registered Exchanges Act, 2024 (DARE 2024), signaling a significant move towards regulatory clarity in the digital assets industry. The Executive Director of the Securities Commission, Christina Rolle, emphasized that DARE 2024 sets a new standard for digital asset regulation, focusing on investor protection and responsible innovation. This legislation aims to position The Bahamas as a leader in digital asset regulation globally, following the aftermath of FTX’s collapse in 2022.
The collapse of the FTX exchange, with its subsequent $32 billion valuation, exposed weaknesses in the Bahamas’ crypto regulations and raised doubts about the country’s attractiveness to crypto companies. The imprisonment of FTX’s founder and CEO, Sam Bankman-Fried, highlighted the need for more stringent regulations in the digital assets industry. DARE 2024 expands the regulated activities to include advisory services, management services, digital asset derivatives, and staking services, reflecting the evolving nature of the industry.
The new legislation introduces stricter requirements for digital asset exchanges to enhance investor and consumer protection. It establishes clear guidelines for custody management of digital assets and custodial wallet services. DARE 2024 also outlines registration processes, asset reserve policies, and custody management for stablecoins, providing a comprehensive framework for stablecoin operations. Additionally, the law mandates timely disclosure, financial reporting, and addresses conflicts of interest in the industry.
DARE 2024 prohibits the issuance of algorithmic stablecoins and privacy tokens, aiming to prevent potential risks associated with these assets. The legislation also imposes restrictions on Proof-of-Work (PoW) token mining activities in the Bahamas to mitigate environmental concerns and potential conflicts with existing regulations. Furthermore, the law categorizes NFTs as financial or consumer assets, clarifying their regulatory status within the digital assets industry.
The Bahamas’ adoption of the DARE 2024 Act represents a step forward in enhancing regulatory clarity and investor protection in the digital assets industry. By addressing the shortcomings exposed by FTX’s collapse, the new legislation aims to reestablish The Bahamas as a pro-crypto hub and attract more companies to operate in the region. With a focus on responsible innovation and comprehensive regulatory frameworks, DARE 2024 sets a new standard for digital asset regulation globally.
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