The Securities Commission of the Bahamas (the Commission) announced today that the Bahamian Parliament has passed the Digital Assets and Registered Exchanges Act 2024 (DARE 2024), further solidifying the Bahamas' leadership in global digital asset regulation. DARE 2024 is a comprehensive upgrade from the 2020 DARE Act, designed to address the rapid development of digital assets and cryptocurrency markets.
Christina Rolle, Executive Director of the Securities Commission, stated, "DARE 2024 marks a new milestone in digital asset regulation, reflecting our steadfast commitment to robust risk management. Our framework not only focuses on investor protection but also encourages responsible innovation, positioning the Bahamas as a leader in global digital asset regulation."
Features of DARE 2024
DARE 2024 takes a proactive approach, ensuring alignment with international best practices and recommendations from standard-setting bodies, including the International Organization of Securities Commissions’ standards for regulating cryptocurrencies and digital assets and the Financial Action Task Force's recommendations. The new act also considers global legislative and regulatory developments, the evolution of emerging risks, and the outcomes of extensive stakeholder and industry consultations.
Key Highlights
- Expanded Scope: The Act now covers a broader range of digital asset activities, including advisory or management services, digital asset derivatives, and staking services. The Commission retains flexibility to add other activities as the industry evolves.
- Enhanced Digital Asset Exchange Requirements: Digital asset exchanges must adhere to strengthened investor and consumer protection measures, including rigorous systems and control requirements to ensure the integrity and security of transactions.
- Robust Custody Framework: The new regulations incorporate the custody of digital assets or custodial wallet services into DARE 2024, enhancing the protection of client interests through provisions ensuring the accessibility of digital assets.
- Staking Framework: DARE 2024 introduces an unprecedented disclosure regime for staking digital assets belonging to clients or operating or managing a staking pool as a business.
- Comprehensive Stablecoin Framework: The Act clarifies the definition of stablecoins, stipulates the registration process for existing stablecoins, specifies acceptable forms of reserve assets, and establishes new requirements for the custody, management, segregation, reporting, and redemption of reserve assets. The Act explicitly prohibits the issuance of algorithmic stablecoins.
- Digital Asset Issuers: The new Act incorporates appropriate standards for digital asset issuers, including new disclosure and financial reporting requirements to enhance investor protection measures.
- Other Important Provisions: DARE 2024 includes strong standards for addressing conflicts of interest and related third-party relationships. The new legislation also addresses the classification of non-fungible tokens as financial assets or consumer assets, sets liquidity and reporting requirements, prohibits the issuance of privacy tokens, and introduces certain restrictions on proof-of-work mining.
Implementation Significance
The implementation of DARE 2024 will provide a competitive, robust, and practical regulatory framework for both new fintech entrepreneurs and established digital asset businesses in the Bahamas, further cementing the country’s position as a leading international financial center. The new Act represents the Bahamas’ ongoing commitment to developing a regulatory framework that offers stronger protection for consumers and investors.
Related Legislation
The Securities Industry Act 2024 was passed concurrently with DARE 2024 in the Bahamas, updating the regulatory regime for the securities industry to ensure a strong and flexible framework that remains in line with global standards and international best practices.
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