Caribbean Review: Bahamas DARE Act 2024 Solidifies Nation As A Frontrunner For Safe Crypto Economy
Kanchanara
Sam Bankman-Fried’s cryptocurrency exchange, Futures Exchange (FTX), collapsed in 2022 and contributed to the introduction of new legislation, a doubling down on the original Digital Assets and Registered Exchanges (DARE) Act 2020, in 2024, due to the impact it had on the Bahamas and their pursuit of a safe crypto market. FTX was meant to be a leading exchange in the Bahamian government's push to become a crypto haven. This comes after the country has had an over-reliance on tourism and banking.
“Just as quickly as FTX became ingrained in elite Bahamian circles, did the whole thing unravel. FTX failed in spectacular fashion in early November, going from solvent to bankruptcy in less than a week,” wrote AP.
FTX’s November 2022 bankruptcy was caused by fraud committed by the company's founder and CEO, Sam Bankman-Fried, who spent billions of dollars in customer investments to cover another company he founded called Alameda Research. CoinDesk, a financial information company, reported that Alameda had received billions of dollars worth of FTX Token, or FTT, on November 2, 2022. This report led to suspicion around FTX and how safe it was to invest in, leading to the loss of big investors like Binance and a rapid drop in the value of FTT. FTX announced that it had filed for bankruptcy on November 11, 2022.
Bahamian prominent philanthropist Bishop Lawrence Rolle, who helps run International Deliverance Praying Ministry in Over-The-Hill in Nassau, received $50,000 from FTX in 2022, when it relocated to the Bahamas in 2021 and made several donations. Rolle and his staff feed roughly 2,500 people a week. Rolle said the money was used to restore a food storage trailer and make food donations. It costs upward of $10,000 a week to run his food donation program. Fortunately, Rolle spent the money before FTX went bankrupt. “We pinched that money the best we could, buying flour, rice,” Rolle said to AP. “There’s just too many hungry people.”
On July 31, 2024, the Security Commission of the Bahamas announced the passing of the DARE Act 2024. This legislation was built upon the foundation of the DARE Act 2020, another Bahamian digital asset regulation and protection law. An article announcing the act said it is “a pacesetting move that solidifies the country’s position as a leader in digital asset regulation.”
“DARE 2024 represents a new standard in digital asset regulation and is a testament to our commitment to robust risk management,” said Christina Rolle, Executive director of the Securities Commission. “We have created a framework that not only focuses on investor protection, but also encourages responsible innovation, positioning The Bahamas at the forefront of digital asset regulation globally.”
The new reforms in the 2024 act took recommendations and notes from the International Organization of Securities Commissions’ standards and the Financial Action Task Force. Some key points of the DARE Act 2024 include a wider coverage of digital asset activities and networks, a tighter hold on digital asset exchanges to follow protection requirements, an expanded custody of digital assets and custodial wallet services under DARE 2024, and other user protections. The law represented a commitment to protect consumers and investors.
Bahamas’ DARE Acts elevate the country to being up there with other countries regulating the crypto market, but unlike many others in this club, these laws aren’t really “anti-crypto”. The DARE Act 2024 was created to protect customers and make a healthier and safer crypto market in the country to protect it from another collapse like FTX and other fraud in digital finance.
“Through these amendments, we will maintain the Securities Commission of The Bahamas’ (SCB) position as a world-class regulator, inspiring investor confidence in our financial services sector and capital markets,” said Prime Minister and Minister of Finance, Philip Davis of the Bahamas, in an interview before the legislation passed. “As a result of our efforts, the Bahamian public will reap the economic benefits of increased investor confidence.”
A December 2024 article published by Cryptopolitan, a global cryptocurrency news network with a positive reputation within the space, reports that the Bahamas holds an “Unequivocally Friendly Stance” regarding crypto, in contrast to countries like China and Saudi Arabia that have outright banned cryptocurrency. They attribute this to the amount of regulation the country has in place to strive for the safety of the investors and consumers. Before the DARE acts, the Bahamas was more cautious about digital assets and cryptocurrency, but that has changed to a more welcoming stance due to a recognition of the “potential economic benefits, job creation, and tax revenue” that could come from investing in a safe digital economy.
The DARE Acts, aside from regulation, have been useful in defining and classifying different digital assets, such as virtual currency tokens, utility tokens, and asset tokens, further supporting a welcoming stance from the country.
Cryptopolitan, with its global reach and reputation as a reliable source for cryptocurrency news, said, “This openness to innovation and adaptability positions The Bahamas as an attractive destination for digital asset businesses seeking a well-regulated environment,” after supporting the regulations and classifications provided in the DARE Acts.
