The Tribune

The level of interest from digital asset entrepreneurs in using The Bahamas for token issues and other ventures "mandated" this nation move swiftly on a supervisory regime, a top regulator said yesterday.

Christina Rolle, the Securities Commission's executive director, said the Digital Assets and Registered Exchanges (DARE) Bill now provides the legal framework for a compliant and well-regulated Fintech (financial technology) sector that is focused on cryptocurrencies and other niche sector.

"The number of queries the jurisdiction has received from entrepreneurs interested in venturing into this form of capital raising has mandated that we ensure legislative and regulatory parameters are in place to address how operators conduct themselves, and how token issues come to market,” she said.

"DARE solidifies a legislative structure with standards for entry into, and participation in, the digital assets space. These requirements stipulate who may participate, the level of capital required, the rules for reporting and seeking the Commission’s approval, and the penalties for failure to comply.”

The Securities Commission, in a statement, said the DARE Bill's recent passage into law by Parliament has expanded the range of opportunities available for participants in a Bahamian financial services industry that has spent two decades in a slow but steady decline due to multiple tax and international regulatory offensives against it.

Besides providing expansion possibilities for existing institutions via growth in the digital space, the regulator also voiced hope the legislation will either attract Fintech firms to establish a physical presence in The Bahamas or work with companies already here.

In developing the legislative framework for DARE, the Securities Commission examined the status and regulatory environment of crypto currencies in rival international financial centres (IFCs) such as Switzerland, Hong Kong, Malta and Gibraltar, as well as the US.

"We left no stone unturned in analysing what others are doing to ensure DARE creates a digital asset environment that is on par or exceeds what is being offered in other jurisdictions,” said Ms Rolle.

The DARE legislation, which was passed by Parliament on November 3, facilitates the registration of digital token exchanges and the provision of related services. It also provides for the regulation of digital assets-based payment service businesses, and for the registration and licensing of financial services related to the creation, issuance or sale of digital tokens and other digital assets.

During the House debate, the Prime Minister said a Fidelity Digital Assets’ Institutional Digital Assets Report showed the explosive growth of virtual assets, including virtual currencies, and the need for a jurisdiction such as The Bahamas to equip itself with compliant and competitive legislation to participate in the industry.

“The survey of almost 800 institutional investors across the US and Europe indicated that 36 percent of respondents are invested in digital assets, and that six out of ten believe digital assets ‘have a place in their investment portfolio’,” said Dr Hubert Minnis.

According to the report, over 80 percent of investors indicated they would be interested in institutional investment products that hold digital assets.

“As an international financial centre with a considerable wealth management focus, this trending investor interest speaks to the potential for Bahamas-based wealth management experts to offer financial service related to digital assets,” the Prime Minister added.