Bahamas Regulator Ahead of the Game with DARE, 2024

It has been several years in development and follows a formal year-long public consultation, but on 31 July 2024, the Bahamas Digital Assets and Registered Exchanges Act, 2024 (DARE 2024) passed into law. Building on the earlier 2020 DARE Act, the new legislation has been described as ‘transformative.’ The Act signals the seriousness with which the Bahamas regulates digital assets, demonstrating proactive engagement to minimize risks to consumers and financial institutions.

At ParrisWhittaker, we are increasingly involved in transactions and cases featuring digital assets such as Bitcoin and other crypto assets. Robust local regulation is welcomed as it reassures clients and adds credibility to various investment products, enabling commercial and private clients to seize financial opportunities in these emerging asset classes.

Below, we explore digital asset regulation and highlight key provisions of DARE 2024.

ParrisWhittaker is a team of award-winning lawyers headquartered in the Bahamas, with strategically located offices across the region and overseas. We advise on all aspects of commercial law, including regulatory matters.

We’re available at 1-242-352-6110 and 1-242-352-6112, or you can contact us online.

Why Regulate Digital Assets?

Governments worldwide continue to grapple with the regulation of digital assets. How far should they go to protect consumers and prevent financial crime while encouraging investment and innovation?

In the UK, US, and China, regulation of digital assets (cryptocurrency, stablecoins, and NFTs) has intensified. There is consensus that these assets’ global prevalence necessitates regulation to protect consumers and potentially safeguard global financial stability.

We believe regulations will continue to evolve, balancing investor protection with market freedom to foster innovation. Regulators like the Securities Commission of the Bahamas must ensure regulation remains fit for purpose as technology advances rapidly. This is no easy task.

What Does DARE 2024 Do?

DARE 2024 builds on earlier legislation from 2020, introducing comprehensive reforms to address the evolving digital asset landscape. It forms a cornerstone of legislative measures in the Bahamas, aimed at robust risk management and encouraging responsible innovation. Other key regulations include the Investment Funds Act, 2019, the Financial and Corporate Service Providers Act, 2020, and the Carbon Credit Trading Act, 2022. Also relevant are the Digital Asset Guidelines, 2023.

Key points about DARE 2024:

• The legislation expands regulation to cover 17 classes of digital activities, including advisory or management services, custody of digital assets, derivatives, and staking services.
• Digital asset exchanges must meet stringent investor protection requirements, including real-time transaction reporting and operational controls (DARE 2024 s22).
• Custody of digital assets and custodial wallet services are regulated to enhance client protection and ensure accessibility.
• A first-of-its-kind disclosure regime for staking digital assets requires detailed reporting, including staking methods and periods (DARE 2024 s20).
• The Act defines stablecoins and establishes their registration requirements.
• Investor protection measures include fit-and-proper standards for digital asset issuers and enhanced disclosure and reporting requirements.

Comment

DARE 2024 is expected to solidify the Bahamas’ reputation as a competitive yet well-regulated environment for digital asset businesses. Its innovative measures, particularly for staking digital assets, position the Bahamas as a leader in legislating for this fast-changing digital landscape.

Contact Us

Please feel free to reach out to us at ParrisWhittaker for an initial, no-obligation discussion.