The Bahamas has enacted the Digital Assets and Registered Exchanges Act, 2024 (DARE 2024) to more agilely and robustly regulate financial activities involving cryptocurrencies and digital assets.
The recent promulgation of the DARE Act 2024, by the Parliament of the Bahamas, represents a significant step forward for the nation on its path to creating a more robust and effective regulatory framework for the growing cryptoasset market.
This new legislation builds on the foundations of the DARE Act of 2020 and introduces significant comprehensive reforms to adapt to market dynamics, with the aim of consolidating the country's position in the field of digital economy and financial innovation.
Bahamas' new crypto law targets investors
The DARE Act of 2024 expands the scope of existing digital asset regulation to include cryptocurrency advisory or management services, crypto-asset derivatives markets, and staking services, while maintaining a focus on the protection and security of crypto-asset investors and consumers by implementing stricter system requirements and controls in the market.
Furthermore, according to the release By the Bahamas Securities Commission, the new crypto law also establishes a robust framework for the custody of digital assets and explicitly prohibits algorithmic stablecoins, aligning with international best practices and recommendations from standard-setting bodies.
All of these measures seek to make The Bahamas a jurisdiction for innovation, strengthening its position as a trusted financial center in the digital asset sector.
New cryptocurrency activities are authorized for inclusion
Key aspects such as the expansion of the scope of application, investor and consumer protection, and the custody of digital assets were also addressed in the preparation of DARE 2024.
With a focus on adaptability, the new Bahamian law allows for the inclusion of new activities related to cryptocurrencies, tokens and digital assets, which aligns perfectly with the ever-evolving nature of the crypto space.
On the other hand, the law states that digital asset platforms or markets are subject to stricter control requirements in order to ensure the security and integrity of transactions at all times. This underlines the country's commitment to protecting crypto-asset investors. In line with the above, the new DARE 2024 law also introduces a robust framework for the custody of digital assets, thus improving the protection of clients' interests and ensuring the accessibility of digital assets.
Christina Rolle, executive director of the country's Securities Commission, emphasized that the approval and implementation of the DARE Act 2024 “It represents a new standard in digital asset regulation and is a testament to our commitment to robust risk management”.
DARE 2024: Fostering responsible innovation
For the first time, The Bahamas is establishing a disclosure regime for cryptocurrency staking and the operation of staking pools, adding an additional layer of transparency to the sector while also demonstrating the country’s interest in being at the forefront of technological innovation.
Regarding stablecoins, the DARE 2024 Act provides a clear definition for these cryptoassets and sets requirements for their registration and management, including a ban on algorithmic stablecoins, reflecting a cautious stance towards innovations that could present significant risks to investors and users.
Investor protection measures are also being strengthened with suitability rules for digital asset issuers and new financial reporting and disclosure requirements, ensuring that market participants operate with maximum transparency and responsibility, to avoid frauds such as the one at FTX.
Finally, the DARE Act 2024 establishes a strict legal framework that comprehensively addresses conflicts of interest and interactions with third parties in the crypto market. This legislation also categorizes non-fungible tokens (NFTs), sets liquidity and reporting standards, and takes steps to protect the privacy and environmental sustainability of the market by introducing certain restrictions on cryptocurrency mining in the country.
With these provisions, the DARE Act of 2024 seeks to balance innovation in the digital asset space while maintaining consumer protection and financial market integrity.
