The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

DIGITAL assets business involving The Bahamas “contracted by more than 70 percent” in the year after FTX’s collapse, it has been revealed, with less than 3 percent of such transactions linked to “criminal activity” in the nearly two years to end-July 2026.

The Securities Commission, unveiling its first-ever supervision and surveillance report on The Bahamas’ digital assets and crypto currency sector, said that -while “activity has been materially smaller and event-driven” since FTX’s November 2022 demise - some $472m worth of transactions between digital wallets took place over the 22 months between September 2024 and this July.

The regulator added that its tracing of digital asset flows linked to The Bahamas shows the exposure to both criminal activity and “higher risk services” is “consistently small”. Just 2.03 percent of digital assets transactions in the 16 months to end-December 2025 were identified as tied to criminal activity, such as frauds, scams and darknet markets, with only 0.27 percent linked to “higher risk” such as overseas crypto exchanges that lack customer ID requirements.

And, while the volume of digital assets transactions linked to criminal activity rose to 2.8 percent during the first seven months of 2026, the Securities Commission attributed the jump largely to “flows to a single international exchange designated by a foreign sanctions authority in May 2026”. It added that most of the transactions involving The Bahamas occurred before sanctions were imposed, and assets worth just $468,376 were involved.

The Bahamian digital assets sector, the regulator added, now serves more than 2.159m clients worldwide and holds combined customer assets worth $33.65bn. Just 1,376 clients, with combined digital assets of $16.5m, live in The Bahamas to ensure more than 99.9 percent of the industry’s customer base resides overseas. Of those, 65 are classified as politically exposed persons or PEPs.

Sector participants, according to Securities Commission of The Bahamas data, have more than tripled from the ten who existed at December 31, 2022, in the aftermath of FTX’s implosion to 35 now. Some 20 are deemed to be active, with 22 percent regarded as posing a “low” supervisory and regulatory risk; the majority, some 69 percent, offering a “medium-to-low” risk; and the remaining 9 percent ranked as “medium-to-high”.

Noting the impact from FTX’s failure, the Securities Commission’s report said: “On-chain activity connected to the jurisdiction peaked in late 2022. From that peak to the trough at the end of 2023, estimated transaction volumes contracted by more than 70 percent in both directions, reflecting the exit of the jurisdiction’s largest market participant and the global market cycle.

“Activity has since been materially smaller and event driven: An estimated $401.9m in total on-chain volume across wallets connected to the jurisdiction between September 2024 and December 2025, and an estimated $70.1m between January and July 2026, concentrated in a small number of quarters.” The Securities Commission added that decentralised finance has overtaken centralised exchanges as the main digital asset counterparty hub or trading forum.

As for The Bahamas’ exposure to “criminal activity” and “higher risk” services from digital assets transactions, the Securities Commission report said these flows are constantly traced and monitored to that it can “act on it” if anything illegal or untoward is discovered.

“The measured exposure here is constantly small,” the Bahamian regulator reassured. “Inflows from higher-risk sources were estimated at 0.16 percent of inbound value in the period to May 2024, a decline from previous years. Of flows traced to classified destinations between September 2024 and December 2025, an estimated 97.7 percent went to legitimate services, 2.03 percent to services associated with criminal activity, and 0.27 percent to higher risk services.

“Between January and July 2026, the corresponding estimates were 97.12 percent, 2.8 percent and 0.07 percent. The 2.8 percent is driven principally by flows to a single international exchange designated by a foreign sanctions authority in May 2026, most of which pre-dates the designation and amounts in absolute terms to an estimated $468,376 or 0.67 percent of total period volume…..

“As at the reporting date, a small number of suspected unregistered services connected to the jurisdiction are under monitoring: Three services, of which two remain active and one has shown no activity since August 2025. One of the monitored services shows exposure to higher-risk counterparty categories and is prioritse accordingly.” The Securities Commission reiterated it “is an offence” to operate an unregistered digital assets firm from The Bahamas.

The Securities Commission added that, of the 342 suspicious transactions reports (STRs) related to digital assets that it received in 2022, nearly all - some 330 - were linked to FTX. STRs dropped to 34 in 2023 following the crypto exchange’s collapse, but then rose again to 164 and 206 in 2024 and 2025, respectively, as digital assets activity recovered and the number of licensed operators expanded.

Disclosing that it has conducted 16 on-site examinations to check licensees’ anti-financial crime defences since January 2026, plus five ‘Travel Rule’ reviews to ensure customer beneficial ownership information is sent with a transaction, the Securities Commission says it has assessed 17 of its 20 active registrants so far this year.

Two anti-financial crime assessments found no deficiencies. And, of the total 16 examinations and inspections, some 82 findings were made for “an average of just over five” per visit. There were also some 16 “non-binding recommendations”. More than half the 82 findings involved late or missed legal filing requirements and none related to “missed sanctions exposure”.

“No finding in the programme indicated that a designated or sanctioned person went unreported, that a positive screening match was missed, or that assets that should have been frozen were not,” the Securities Commission said.

As for the so-called “Travel Rule’, some 44 examinations have been carried out from 2021 to the present. Of the 1,831 digital wallet transfers sampled, only eight breaches involving three licensees have been found by the 44 examinations.

Elsewhere, the Securities Commission has designated the securities and investment fund administration sector, which held $256.6bn in client assets at end-December 2025 and an investment fund net asset value of $45.6bn in assets under administration, as “medium to high risk”.

It justified this on the basis of the sector’s high value, large international client base and “remote onboarding” of customers overseas or by third-party intermediaries, which attracts money launderers.

The regulator added that the sector had some 202 licensees at year-end 2025, including 161 securities firms, marketplaces and clearing facilities, and around 850,000 clients. Of the latter, 117,990 live in The Bahamas and 732,553 or 86 percent live abroad, with 2,075 classed as PEPs.

The Securities Commission also ranked the financial and corporate services provider segment’s risk as “medium-high” as it administers 27,700 entities with 634 new formations since year-end 2025. Some 293 licensees are registered in this segment.

Money lenders, payment and financing businesses, which have a 98 percent Bahamas-based client based, are ranked as posing a “medium” financial crime and regulatory threat. It has $6.6bn in assets and 102,141 client relationships.