The Securities Commission of the Bahamas has opened consultations for its revised DARE crypto law following the collapse of FTX.
The DARE Bill 2023, expected to come into force at the end of Q2 2023, expands customer protection rules and introduces disclosure and registration requirements from the DARE 2020 Act.
DARE Bill 2023 Focuses on Customer Protection
DARE 2023 expands the definition of “Digital Business Activities” to include offering financial advice on digital assets, digital asset derivatives activities, blockchain node operation, and staking services.
It compels wallet providers and crypto custodians to protect and ensure the accessibility of customer assets. Institutional and pooled staking services receiving customers’ digital assets are subject to unique disclosures.
Foreign digital asset issuers can register with the Securities Commission, which will keep an initial coin offering inventory.
DARE 2023 also defines stablecoins, describes acceptable asset reserves, and contains rules about reserve management, including segregation and redemption. The law excludes algorithmic coins.
Non-fungible tokens (NFTs) are identified as either financial or consumer assets, with the former falling within regulatory jurisdiction.
Regulators Forced to Rethink
The new bill comes after the failure of FTX Trading Limited hurt the Bahamas’ reputation as a burgeoning crypto hub. FTX secured registration for its Bahamian subsidiary FTX Digital Markets under the DARE 2020 Act in Sep. 2021.
According to court filings by FTX bankruptcy lawyers, former FTX CEO Sam Bankman-Fried enjoyed an “accommodating” relationship with Bahamian regulators.
Prime Minister Philip Davis was present at the groundbreaking ceremony for FTX’s global headquarters in Nassau, Bahamas.
FTX Trading and its affiliated debtors agreed yesterday to sell FTX clearinghouse LedgerX for $50 million to M7 Holdings, LLC. The U.S. Bankruptcy Court must approve the deal.
Bankruptcy lawyer Andy Dietderich recently floated a bold plan by the Debtors to restart the exchange.
In December 2022, FTX Trading CEO John Ray accused the Securities Commission of working with Bankman-Fried to remove $100 million from FTX before the exchange filed for bankruptcy in November 2022.
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