FTX Fallout Ushers In Stricter Crypto Regulation Proposal In The Bahamas

The Securities Commission of the Bahamas has announced its plans to stiffen its cryptocurrency regulations that were stained by the collapse of the FTX exchange. The crypto empire co-founded and led by Sam Bankman-Fried was headquartered in the island country before its collapse last year.

The new proposed bill, dubbed DARE 2023 or the Digital Business Activities, intends to strengthen the financial and reporting requirements of crypto businesses operating in the country. It includes measures on proof-of-work mining and staking, stablecoins, digital asset derivatives and blockchain node operation, among many others.

Additionally, DARE 2023 requires crypto wallet providers and custodians to protect its customers' assets while providing accessibility, with pooled and institutional staking services that receive customers' digital assets subjecting to a different level of disclosure.

"I am pleased to present for consultation the Digital Asset and Registered Exchanges Bill 2023, which will modernize and strengthen requirements for conducting digital asset businesses in the Bahamas, and for the protection of consumers, investors, and the markets," said Securities Commission Executive Director Christina Rolle in an official statement.

"Once passed, DARE 2023 will be among the most advanced pieces of digital asset legislation in the world and will align with The Bahamas' commitment to facilitating development and innovation in a well-regulated environment," Rolle added.

The bill strengthens requirements for cryptocurrency exchange platforms, crypt custody and even non-fungible tokens that qualify as financial NFTs.

The Bahamas' proposed crypto regulation bans algorithmic stablecoins and privacy tokens. The country's financial watchdog has invited feedback on the bill, which can be submitted until May 31.

"We invite the public to respond to this consultation process as we seek to develop and expand the legislative framework," the SC executive director said.

The agency said it is trying to update the country's law "in light of lessons learned during the so-called 'crypto winter' of 2022." It also noted that "the bill provides the ability for the commission to prescribe additional activities as digital-asset businesses, as necessary."

The Bahamas made headlines for the wrong reasons last year because Bankman-Fried chose the Caribbean nation as the headquarters of his crypto empire and also obtained an operating license.

Bankman-Fried enjoyed an "accommodating" relationship with the financial regulators in the Bahamas, FTX bankruptcy lawyers said in a filing with the U.S. Bankruptcy Court in Delaware.

Bahamas' Prime Minister Philip Davis attended the groundbreaking ceremony of FTX global headquarters in Nassau.

Bankman-Fried was extradited from the Bahamas to the U.S. last year. He is currently on bail and under house arrest at his parents' home in Palo Alto, California, and is awaiting his first criminal trial scheduled for October.