BAHAMAS Law and Practice Contributed by: Dwayne Whylly, Kamala Richardson-Deal and Nastassia Rigby-Rodriguez, Glinton Sweeting O’Brien
rewards and penalties, and provide risk warnings to clients before onboarding and upon request. • Stablecoin issuers: The Bahamas has a dedicated framework for stablecoins: full backing by reserve assets, segregation and reconciliation of reserves, independent proof of reserves reporting, clear redemption rights, and authority to halt or delist where warranted. Algorithmic stabilisation mecha - nisms are not permitted. • Token launches and distribution: public offers are governed by an offering regime that addresses classification, disclosure, approval, advertising and continuing obligations. Issuers must publish an offering memorandum and keep it current; certain limited offers and distributions benefit from tailored exemptions while remaining subject to notice fil - ings and anti-misstatement rules. • Payment service providers using digital assets: operating as a payment service provider business involving digital assets is expressly captured as a regulated activity under the DARE Act 2024, with registration and conduct obligations calibrated to the risks of value transfer and settlement using crypto rails. • Payment systems and remittances (legacy and new players): the Payment Systems Act, 2012 (PSA) gives the Central Bank oversight of pay - ment systems and instruments, including approval of domestic systems, designation powers, and a national payments policy that promotes safety, efficiency, competition, user protection and the development of new payment technologies. This framework supports both established institutions and fintech entrants in modernising domestic and cross-border payments and remittances. • Web3 infrastructure and enterprise blockchain: builders of wallets, protocols and enterprise block - chain solutions play an important role in the eco - system. The DARE Act 2024 clarifies that software development alone does not constitute a digital asset business, though operating exchanges, custody, staking pools or other regulated services does require registration. • Compliance, regtech and digital identity: compli - ance providers support registrants with AML/CFT, data protection and governance obligations. The DARE Act 2024 requires professional conduct, record-keeping and prevention of unauthorised
data access, and designated compliance and money laundering reporting officer roles; the Secu - rities Commission oversees market conduct and has broad supervisory powers. • Market integrity and enforcement: the regime includes purchaser protections in offerings and a comprehensive enforcement toolkit: investigation powers, administrative sanctions, and offences addressing misrepresentation, inside information, insider dealing, unlawful disclosure and market manipulation. • Activities restricted or out of scope: the DARE Act 2024 prohibits unregistered digital asset busi - ness and restricts mining to proprietary activity or where ancillary to a registered business; the DARE Act 2024 also bans the sale of privacy tokens in or from The Bahamas. At the same time, it carves out certain items – such as game-specific tokens, some NFTs by function, e-money-like instruments and digital currency – from its scope so they can be addressed under the appropriate supervisory regimes. 2.2 Regulatory Regime The Securities Commission is the primary regulator of lines of fintech business, which is regulated under the DARE Act 2024, and the Investment Funds Act, 2019 (the “IFA 2019”). • Pursuant to the DARE Act 2024, the Securities Commission regulates the activities of digital asset businesses; registers and supervises digital asset businesses; regulates token offerings; monitors solvency; protects clients; addresses conflicts; issues rules/guidance; and exercises broad inves - tigative and enforcement powers including sanc - tions and offences (misrepresentation, insider dealing, manipulation). • Under the IFA 2019, the Securities Commission regulates investment funds (including SMART Funds), fund managers and administrators; licens - es funds and approves offering documents; and wields expanded powers to protect investors and the jurisdiction’s reputation, aligning with interna - tional standards and best practices. The Central Bank approves and oversees domestic payment systems and payment instruments and elec -
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