- The Securities Commission of The Bahamas has announced the passing of the Digital Assets and Registered Exchanges Act, 2024 (DARE)
- The Parliament of The Bahamas has approved this legislation to position the nation as a global leader in digital asset regulation
- The Bahamas has shown it has learned lessons from the collapse of Bahamas-based FTX nearly two years ago
The Securities Commission of The Bahamas has announced the passing of the Digital Assets and Registered Exchanges Act, 2024 (DARE). This groundbreaking legislation, approved this week by the Parliament of The Bahamas, aims to position the nation as a global leader in digital asset regulation. The development comes almost two years after the Bahamas-based FTX ushered in the crypto winter when it collapsed in spectacular fashion, and the country is clearly trying to show it has learnt its lessons.
New Law Builds on 2020 Version
The 2024 DARE builds on a 2020 law, updating it to introduce significant reforms to address the dynamic nature of digital assets and cryptocurrencies. Key features include expanded regulatory scope, enhanced requirements for digital asset exchanges, and new frameworks for custody, staking, and stablecoins.
The updated law broadens its regulatory coverage to include advisory and management services, digital asset derivatives, and staking services. This comprehensive approach allows the Securities Commission to adapt to the evolving digital asset landscape. The legislation also imposes stricter investor and consumer protection standards on digital asset exchanges, ensuring enhanced integrity and security of transactions.
New provisions under DARE 2024 regulate custodial wallet services and the custody of digital assets, significantly bolstering client interest protection. The Act also introduces a pioneering disclosure regime for staking digital assets and managing staking pools, ensuring transparency and accountability in these operations.
Stablecoin and Digital Asset Issuer Regulations
DARE 2024 sets a clear definition for stablecoins, outlines requirements for their registration, and specifies acceptable reserve assets. Notably, the issuance of algorithmic stablecoins is prohibited. The Act also establishes fit and proper standards for digital asset issuers, accompanied by stringent disclosure and financial reporting obligations to protect investors.
This legislative advancement is expected to sustain a competitive and pragmatic regulatory environment for fintech entrepreneurs and established digital asset firms in The Bahamas. By aligning with international best practices and the recommendations of global standard-setting bodies, such as the International Organization of Securities Commissions and the Financial Action Task Force, DARE 2024 aims to enhance The Bahamas’ standing as a premier international financial centre.
