Draft legislation has been put forward to give The Bahamas a clear competitive advantage with respect to digital asset solutions as financial technologies continue to drive growth in the financial services sector.
The Digital Assets and Registered Exchanges Bill, 2019 (DARE), which was developed by the Securities Commission of The Bahamas (SCB), provides solutions for digital asset applications and creates a proper regulatory framework for The Bahamas’ crypto market.
“Disruptions caused by the digitization of the economy are leading to a new wave of regulatory reform. As countries around the world innovate new ways to safeguard against the erosion of their tax base, these developments will undoubtedly affect us here in The Bahamas. With the DARE legislation, we are looking to the future, anticipating and preparing for the changes on the horizon, forming coalitions to influence the nature of change,” said Deputy Prime Minister and Minister of Finance Peter Turnquest.
“The whole issue of crypto currencies and assets is very dynamic. We have been deliberate in creating a regulatory environment that safeguards the country’s economic interests and shores up our global competitiveness. These efforts will help to grow our reputation as an innovative and responsive financial centre,” he added.
The Bahamas has a budding crypto ecosystem, including: crypto start-ups, exchanges, and traditional financial institutions servicing crypto companies. Requests continue to come to the Government from related businesses like crypto custodians, and companies conducting initial token offerings (ITOs) and security token offerings (STOs) that want to base their business in The Bahamas.
“New legislative initiatives will facilitate these growth opportunities and drive innovation and diversification in the industry. I look forward to presenting the Bill to Cabinet when the public consultation phase is complete,” said the Finance Minister.
The DARE Bill provides for the regulation of the issuance and sale of digital tokens, and for the regulation of the conduct of those issuing digital tokens and those providing intermediary services related to the issuance of digital tokens. It also provides clarity with respect to stable coins.
Specifically, the Bill creates a legislative structure by which persons who wish to participate in the digital token space are guided on the requirements for entry into and participation in the industry. These requirements stipulate who may participate, the level of capital required, the rules for reporting and seeking the Commission’s approval, and the penalties for failure to comply.
Additionally, the rules stipulate that participants must adhere to established anti-money laundering (AML) and counter-financing of terrorism (CFT) laws, must take data protection measures related to the personal information of clients, and must implement measures to prevent data breaches which would jeopardize the crypto assets of clients.