The passage of the Digital Assets and Registered Exchanges Bill, 2020 (DARE) has put in place the legal framework for a vital, well-regulated and compliant industry in the Bahamas for those interested in entering the digital asset space, the government of the Bahamas has announced.
It also creates specific opportunities for entrepreneurial Bahamian fintech firms to enjoy the credibility of being licensed and functioning under a comprehensive regulatory regime and participate in the Fintech industry that is being forged with the DARE Bill.
DARE legislation, which was passed in the House of Parliament on 3 November, facilitates the registration of digital token exchanges, and the provision of services related to digital token exchanges. It also provides for the regulation of digital assets-based payment service businesses and for the registration of financial services related to the creation, issuance or sale of digital tokens and other digital assets.
Prime minister and minister of finance, Hubert Minnis, said a Fidelity Digital Assets' Institutional Digital Assets Report illustrates the explosive growth of virtual assets, including virtual currencies, and the need for a jurisdiction like the Bahamas to equip itself with compliant and competitive legislation to participate in the digital asset space.
"The survey of almost 800 institutional investors across the US and Europe indicated that 36% of respondents are invested in digital assets, and that 6 out of 10 believe digital assets 'have a place in their investment portfolio'," said the PM.
According to the report, over 80% of investors indicated that 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 said.
The SCB has been working in close consultation with industry and outside consultants on the development of DARE for the past two years.
SCB Executive Director Christina Rolle noted that with the intense interest in digital asset related businesses, it was essential for the jurisdiction to have an appropriate regulatory framework in place.
A bigger playing field
"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.
Rolle added, "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."
By establishing the legal foundation for a new industry, the ministry said DARE expands the playing field for financial services activity in the country, potentially creating new businesses and providing expansion opportunities for existing financial services providers and corporate services providers to grow their businesses into the digital space. It also allows for new fintech operators to establish operations in The Bahamas, or to work with firms already in country.