Download as PDF

The collapse of FTX in early November (2022) and the subsequent commencement of bankruptcy proceedings in Delaware and liquidation proceedings in The Bahamas are seismic events which have shaken the sector worldwide. From initial estimates, this is likely to be the single largest insolvency in the country’s history, and has prompted questions as to the future of the cryptocurrency industry generally and the necessity for increased regulation and oversight of the sector. Notwithstanding the unprecedented scale of this event, the fintech sector in The Bahamas operates within a transparent policy and legislative regime, encompassing activities beyond cryptocurrency.

From a central Government policy perspective, the Government of The Bahamas (the “Government”) published a Policy White Paper on The Future of Digital Assets in The Bahamas (the “White Paper”) in April, 2022. The White Paper outlines the Government’s vision and policy position on the regulation of the digital assets space over the next 5 years, including its objectives to grow the sector, increase the attractiveness of The Bahamas for digital assets businesses, establish The Bahamas as a leading digital assets hub and encourage innovation in the Fintech space.

There has been a dedicated regulatory framework in The Bahamas for digital assets businesses since 2020, which is based primarily on the Digital Assets and Registered Exchanges Act, 2020 (the “DARE Act”). The DARE Act regulates initial token offerings and digital assets businesses, in or from The Bahamas. The range of digital assets businesses which require registration under the DARE Act include (i) digital token exchanges, (ii) the provision of services to such exchanges, (iii) payment services providers utilising digital assets, (iv) digital asset service providers and (v) the provision of financial services relating to the sale or offering of digital assets. The custody of digital assets and the provision of wallet services are separately regulated under the Financial and Corporate Services Providers Act, 2020 (the “FCSPA”).

Both the DARE Act and the FCSPA are administered by the Securities Commission of The Bahamas (the “Commission”),the primary securities regulator in the Bahamas. The responsibilities of the Commission under the DARE Act include, the regulation, monitoring and supervision of digital assets businesses and the development of rules, guidance and codes of practice in connection with the conduct of digital assets businesses and initial token offerings*.

In March of 2022, the Commission published the Digital Assets and Registered Exchanges (Anti-Money Laundering, Countering Financing of Terrorism and Countering Financing of Proliferation) Rules, 2022 (the “DARE Act AML Rules”), which imposed the same anti-money laundering and counter terrorist financing obligations on registrants under the DARE Act, as traditional financial institutions, in accordance with international best practices. These obligations include, (i) the implementation of a risk rating framework, which among other things, assesses the risk profile of the registrant and its customers, (ii) the development of internal controls and procedures for the prevention, detection and disclosure of risks associated with money laundering, the financing of terrorism and the financing of the proliferation of weapons, in accordance with the Financial Transactions Reporting Act, 2018, (iii) the verification of customer identity, (iv) the maintenance of customer identification and transaction records, (vi) suspicious transaction reporting and (vi) the provision of ongoing employee education and training.

More recently, the Commission published its own policy statement outlining The Bahamas’ Approach to the Regulation of Digital Assets Businesses** (the “SCB Policy Statement”). The SCB’s Policy Statement outlines the Commission’s considerations in developing the regulatory framework for the sector, describes its regulatory philosophy, clarifies the registration and supervision process and outlines future considerations for the regulation of the sector.

In order to address the rapid evolution of the sector, the Commission has confirmed its intention to review and amend the DARE Act. The areas which have been identified by the Commission to date for potential inclusion in those amendments are, regulatory accounting considerations, segregation of client assets, decentralised finance (de-fi), staking, yield farming, advertising of digital assets, stablecoins, Web 3 and non-fungible tokens (NTFs)***.

In addition to the regulation of the digital assets space, The Bahamas has implemented a number of measures in recent years to modernise its payments systems. The world’s first nationwide central bank digital currency, the Sand Dollar, was launched by the Central Bank of The Bahamas (the “Central Bank”) in October, 2020, after a pilot program on the Island of Exuma in 2019. The launch of the Sand Dollar was a continuation of the Bahamian Payments Systems Initiative which began in 2003. The Sand Dollar is not a cryptocurrency. It is issued by the Central Bank and fully backed by the country’s foreign currency reserves. The objectives of the Sand Dollar project include increasing the efficiency of payments systems, increasing financial inclusion, providing non-discriminatory access to payments systems and strengthening anti-money laundering and counter terrorist financing defenses by reducing cash usage. Since the full re-opening of the Bahamian economy after the Covid 19 pandemic, the Central Bank has engaged in more aggressive marketing activity to promote the use of the Sand Dollar in domestic commerce, such as partnering with the organisers of local cultural festivals where the only permitted form of payment is the Sand Dollar.

As a part of a cheque usage elimination project, the Central Bank, the Clearing Banks Association and local Supervised Financial Institutions have committed to cease using Bahamian dollar cheques as negotiable instruments for the acquisition of goods and services and the settlement of legal and financial obligations in The Bahamas on 31st December 2024.

While the FTX debacle will undoubtedly overshadow the industry for some time to come and it remains to be seen whether a global consensus on the optimal method of regulation will be achieved, the regulatory and policy framework for digital assets in The Bahamas is established and the Commission has indicated its intention to strengthen that framework to respond to this rapidly changing space. Moreover, the continued advancement of initiatives such as the Sand Dollar and the cheque elimination project demonstrate The Bahamas’ commitment to the overall modernisation of payments systems in The Bahamas.

*1 Section 5(1)(a) and (b), DARE Act
**Policy Statement PS1/2022
***Section 9, SCB Policy Statement.

First published in The International FinTech Review 2022/23 and released in association with the European Fintech Association & the International Monetary Fund. 


Oscar N. Johnson, Jr. KC, Co-Managing Partner, is the former chair of the Litigation practice group and practises a full range of Corporate and Commercial law, specialising in Commercial and Civil Litigation, Admiralty Law, Insurance Law and Employment Law. He also has recent experience in dealing with contentious fintech matters.


Christel Sands-Feaste, Partner, leads the Firm’s practice groups in financial services, securities, investment funds, and Fintech. A highly regarded lawyer for her specialist expertise in financing transactions, securities (in The Bahamas  & international capital markets), securitisations, and investment fund structuring, Christel has also developed a keen interest and expertise in emerging digital assets and related Fintech.

Higgs & Johnson Maintains Tier 1 Status in The Bahamas

Through the rigorous and independent research process of Chambers Global, Higgs & Johnson maintains its market leader status with...

Higgs & Johnson Attorneys Author Insolvency Guide

Co-Deputy Chair of the Insolvency practice, Tara Cooper Burnside, KC, and Senior Associates, Rhyan Elliott and Kimberleigh Peterson Turnquest,...