BAHAMAS Law and Practice Contributed by: Dwayne Whylly, Kamala Richardson-Deal and Nastassia Rigby-Rodriguez, Glinton Sweeting O’Brien
cation and economic characteristics. One key issue in classification is determining whether a token func - tions primarily as a utility token, payment token, asset token, or stablecoin, or whether it has characteristics of a traditional security. If a digital asset qualifies as a security token (ie, it has characteristics of a security), it is regulated under the Securities Industry Act, rather than the DARE Act. Under the DARE Act 2024, recognised categories of assets include general digital assets issued through token offerings, stablecoins, and digital asset deriva - tives, each subject to specific regulatory requirements. Token issuers must comply with disclosure obliga - tions, including publishing an offering memorandum describing the project, risks, and characteristics of the digital asset. Stablecoins are subject to stricter rules, including reserve asset requirements, segrega - tion of reserves, audits, and redemption rights. In this way, the regulatory framework focuses not only on the existence of a blockchain asset, but on its function, the rights attached to it, and its economic purpose, which collectively determine the applicable regulatory regime. 10.4 Regulation of “Issuers” of Blockchain Assets Under the DARE Act 2024, issuers of digital assets are subject to regulation when conducting a token offering in or from within The Bahamas. An issuer intending to conduct an initial sale of digital assets must be fit and proper and must generally prepare and publish an offering memorandum containing full and accurate disclosure to enable potential purchasers to make an informed investment decision. The offering memo - randum must describe key details about the project, the digital asset, associated risks, and the structure of the offering, and must be filed with the Securities Commission as part of the registration process for the token offering. The issuer must also obtain a legal opinion on the classification of the token and apply to register the token offering with the Securities Commission at least 45 days before the start of the offer period. The Secu - rities Commission has supervisory powers over token offerings, including the ability to require amendments
to disclosures, suspend an offering, or require the removal of misleading advertising. A key challenge to the tokenisation of real-world assets is the classification issue: if a token repre - sents ownership or investment rights similar to tradi - tional securities, it may be deemed a security token and therefore regulated under the SIA rather than the DARE Act 2024. This creates regulatory complexity for projects seeking to tokenise assets such as real estate or financial instruments, as they may fall within mul - tiple regulatory regimes and require compliance with securities laws in addition to digital asset regulations. 10.5 Regulation of Blockchain Asset Trading Platforms The DARE Act regulates digital asset exchanges, which must be registered with and supervised by the Commission. Operators of exchanges must satisfy fit and proper requirements, maintain adequate govern - ance structures, risk management systems, internal controls, and comply with AML/CFT obligations. The DARE Act also requires exchanges to implement rules for fair and orderly trading, including systems to moni - tor trading activity and prevent market manipulation, fraud, and abusive practices (see 6.8 Market Integrity Principles ). Secondary market trading of digital assets may occur on registered exchanges or through other regulated digital asset service providers, such as broker-dealers or intermediaries that facilitate trades between buyers and sellers. These intermediaries must also be regis - tered and comply with the operational, disclosure, and conduct standards established under the Act. While P2P transfers of digital assets between individuals may occur on the blockchain, activities that facilitate or operate a marketplace or matching service for such trades generally fall within the scope of regulated digi - tal asset business and require registration. In this way, the DARE Act seeks to ensure that organised trading environments and intermediated secondary markets operate under a framework designed to protect inves - tors and maintain market integrity. 10.6 Staking Under the DARE Act 2024, staking services are treat - ed as a regulated digital asset business activity and
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