Regulation
Bahamas Introduces New Cryptocurrency Regulation With DARE Act 2024
The Bahamas has taken a major step forward in regulating digital assets with the passage of the Digital Assets and Registered Exchanges Act 2024.
What happened:This new legislation, announced by the Securities Commission of The Bahamas on July 30, 2024, represents a substantial evolution from its predecessor, the DARE Act of 2020.
DARE 2024 introduces sweeping reforms to address the rapidly evolving landscape of cryptocurrency and digital asset markets.
While the 2020 law laid the foundation for digital asset regulation in the Bahamas, the new legislation significantly expands both 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 includes a broader range of digital asset activities.
These include advisory and management services, digital asset derivatives and staking services, areas that were not explicitly covered in the original legislation.
The treatment of digital asset exchanges has also seen significant improvement. With DARE 2024, these platforms must adhere to more stringent investor and consumer protection measures.
This includes rigorous oversight requirements and systems to strengthen the integrity and security of transactions, suggesting a more comprehensive approach than the 2020 law.
One of the main novelties of DARE 2024 is the introduction of a comprehensive framework for the custody of digital assets.
While the 2020 law may have touched on custody to some extent, the new legislation fully includes digital wallet services in its scope, mandating the accessibility of digital assets and introducing other provisions to protect clients’ 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 newer prominence in the cryptocurrency ecosystem.
The new law establishes a first-of-its-kind disclosure regime for digital asset staking, covering both client assets and the operation of staking pools as a business activity.
The treatment of stablecoins has also undergone a significant overhaul.
DARE 2024 provides a clear definition and sets out comprehensive requirements for their issuance, custody and management.
In particular, the new law prohibits the issuance of algorithmic stablecoins, reflecting a more cautious approach to this controversial type of digital asset.
DARE 2024 also introduces fit and proper standards for digital asset issuers, along with new disclosure and financial reporting requirements.
This suggests a more rigorous approach to verification and ongoing oversight of issuers than 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.
Another novelty is the ban on issuing privacy tokens, which reflects growing concerns in the cryptocurrency industry.
Cristina RolleExecutive Director of the Securities Commission, 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 groundbreaking for its time, DARE 2024 represents a significant leap forward in terms of regulatory complexity and coverage.
What’s next: The broader implications of these legislative advances will be a key topic of discussion at Benzinga’s The Future of Digital Assets event of November 19th.
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