Regulation
Bahamas Introduces New Cryptocurrency Regulations with DARE Act 2024
The Bahamas has taken a significant step forward in regulating digital assets with the passage of the Digital Assets and Registered Exchanges Act of 2024.
What happened:This new legislation, announcement by the Bahamas Securities Commission on July 30, 2024, represents a substantial evolution from its predecessor, the DARE Act of 2020.
DARE 2024 introduces sweeping reforms designed to address the rapidly changing landscape of digital assets and cryptocurrency markets.
While the 2020 Act laid the foundation for digital asset regulation in The Bahamas, the new legislation significantly expands the scope and depth of regulation.
One of the most notable changes is the expansion of the scope of activities covered by the new law.
DARE 2020 focused primarily on initial coin offerings and digital asset exchanges. DARE 2024 now encompasses a broader range of digital asset-related activities.
These include advisory and management services, digital asset derivatives and staking services – areas that were not explicitly covered in the original legislation.
The processing of digital asset exchanges has also seen significant improvements. Under DARE 2024, these platforms must adhere to stricter investor and consumer protection measures.
This includes robust systems and controls requirements to strengthen the integrity and security of transactions, suggesting a more comprehensive approach compared to the 2020 law.
A major addition of DARE 2024 is the introduction of a comprehensive framework for the custody of digital assets.
While the 2020 Act likely addressed custody to some extent, the new legislation brings custodial wallet services fully under its control, mandating accessibility of digital assets and introducing other provisions to protect customer interests.
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Perhaps one of the most innovative aspects of DARE 2024 is its approach to staking – a concept that was likely not addressed in the 2020 legislation due to its more recent prominence in the crypto ecosystem.
The new law establishes a first-of-its-kind disclosure regime for digital asset staking, covering both customer assets and the operation of staking pools as a business.
Stablecoin handling has also seen a major overhaul.
DARE 2024 provides a clear definition and establishes comprehensive requirements for their issuance, custody and management.
Notably, the new law bans the issuance of algorithmic stablecoins, reflecting a more cautious approach toward this controversial type of digital asset.
DARE 2024 also introduces fitness and competence standards for digital asset issuers, as well as new financial disclosure and reporting requirements.
This suggests a more rigorous approach to the control and ongoing monitoring of issuers compared to the 2020 law.
The new legislation also addresses several areas that were likely not covered in the original law, including the categorization of non-fungible tokens, liquidity and reporting requirements, and restrictions on proof-of-work mining.
The ban on the issuance of privacy tokens is another new development, reflecting evolving concerns in the crypto space.
Christina RolleSecurities and Exchange Commission executive director, stressed that DARE 2024 “represents a new standard in digital asset regulation.”
This statement, coupled with the comprehensive nature of the new legislation, suggests that while DARE 2020 was revolutionary for its time, DARE 2024 represents a significant leap forward in terms of sophistication and regulatory coverage.
And after:The broader implications of these legislative moves will be a key topic of discussion at Benzinga’s meeting The Future of Digital Assets event on November 19.
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