Bahamas Passes Its DARE 2024 Act to Regulate Crypto and Specifically Prohibiting the Issuance of Algorithmic Stablecoins
FTX was a huge proponent of the Bahamas’ local economy, contributing millions to the local government and other organizations.
- 70% of the Bahamas GDP comes from tourism and related services.
- The $60 million headquarters constructed by FTX has now been abandoned.
- FTX transferred its headquarters from Hong Kong to the Bahamas in September 2021.
Nearly two years after FTX’s collapse, the Bahamas Parliament enacted the Digital Assets and Registered Exchanges (DARE) Act of 2024. The updated legislation introduces comprehensive regulations for the cryptocurrency sector, including a ban on algorithmic stablecoins.
The 112-page DARE Act 2024, proposed as a 2023 bill, updates the 2020 provisions following FTX’s collapse. The exchange’s fall in late 2022 significantly impacted the Bahamas, as the company donated millions locally and even spent $100,000 weekly on catering, and around $40 million in nine months on food, flights, and tickets.
Bahama’s Digital Assets and Registered Exchanges Act 2024 Explained
Here are the six key highlights of DARE 2024:
1. Expanded Scope: The law now covers more digital asset services, including advisory, derivatives, and staking.
2. Enhanced Exchange Requirements: Stricter standards for digital asset exchanges to protect investors and ensure transaction security.
3. Robust Custody Framework: New rules for digital asset custody to protect clients and ensure accessibility.
4. Staking Framework: Introduces transparency rules for staking digital assets and managing staking pools.
5. Stablecoin Framework: Defines stablecoins, mandates registration, sets rules for reserves, and bans algorithmic stablecoins.
6. Digital Asset Issuers: New standards for issuers, including fit and proper criteria and enhanced reporting requirements.
The new document specifies how the Bahamas aims to clean up its image, including provisions like:
“(g) reduce the extent to which it is possible for a digital asset business to be used for a purpose connected with financial crime.”
The Effect of FTX on the Bahamas
Before its bankruptcy, FTX made significant contributions to the Bahamas, where tourism and related services comprise 70% of the GDP. FTX donated hundreds of thousands to millions of dollars to charities, education, government, and local organizations, per Time.
FTX donated $1.5 million in KN95 masks and testing kits during the pandemic.
FTX’s bankruptcy significantly impacted the local community, which spent $40 million in just nine months. Employees spent over $100,000 weekly on catering, used private shuttle services, and hired locals for logistics, event planning, and regulatory compliance, per Cointelegraph.
The collapse of FTX left behind a $60 million headquarters, now abandoned, reflecting the sudden and severe impact on the local infrastructure and economy.
DARE 2024 emphasizes investor protection while promoting responsible innovation.
“We have created a framework that not only focuses on investor protection but also encourages responsible innovation, positioning The Bahamas at the forefront of digital asset regulation globally.” — Christina Rolle, Bahamas SEC Executive Director
