The Securities Commission of The Bahamas has announced the enactment of the Digital Assets and Registered Exchanges Act 2024 (DARE 2024) by the Bahamian Parliament. This legislation builds upon the DARE Act of 2020, introducing comprehensive reforms to address the rapidly evolving digital assets and cryptocurrency markets.
Key Legislative Changes
DARE 2024 broadens the scope of regulated activities within the digital asset sector. The new legislation now covers advisory and management services, digital asset derivatives, and staking services. It also grants the Securities Commission the flexibility to adapt regulations as the industry continues to evolve.
Digital asset exchanges face new, stricter requirements under DARE 2024. These include enhanced investor and consumer protection standards, along with stringent systems and controls to ensure transaction integrity and security.
The Act introduces a robust framework for the custody of digital assets and custodial wallet services, aiming to enhance client protection and ensure accessibility. A new disclosure regime for staking digital assets is also established, covering assets held on behalf of clients or managed within a staking pool.
DARE 2024 sets out a detailed framework for stablecoins, defining them, requiring registration for existing stablecoins, and setting standards for their custody, management, and redemption. The issuance of algorithmic stablecoins is expressly prohibited.
The legislation strengthens investor protection with fit-and-proper standards for digital asset issuers, alongside new disclosure and financial reporting requirements. It also addresses conflicts of interest, connected third-party relationships, and categorizes non-fungible tokens (NFTs) as either financial or consumer assets. Additionally, it introduces liquidity and reporting requirements, prohibits privacy token issuance, and imposes restrictions on proof-of-work mining.
Commitment to Global Standards
The Securities Commission emphasized that DARE 2024 aligns with international best practices and the recommendations of organizations such as the International Organization of Securities Commissions (IOSCO) and the Financial Action Task Force (FATF). The legislation is the result of extensive global benchmarking, risk assessments, and consultations with stakeholders and industry participants.
Christina Rolle, Executive Director of the Securities Commission, commented, “DARE 2024 sets a new standard in digital asset regulation and underscores our commitment to robust risk management. We have developed a framework that emphasizes investor protection while fostering responsible innovation.”
Alongside DARE 2024, the Securities Industry Act 2024 was also enacted, updating the regulatory framework for the broader securities industry. This legislation aims to maintain robustness, agility, and compliance with global standards.
Implications for The Bahamas
The implementation of DARE 2024 is expected to create a competitive and pragmatic regulatory environment for both emerging fintech entrepreneurs and established digital asset businesses in The Bahamas. This move reinforces the country’s position as a significant international financial center.
Photo by Olivia Hutcherson on Unsplash
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