BAHAMAS Law and Practice Contributed by: Dwayne Whylly, Kamala Richardson-Deal and Nastassia Rigby-Rodriguez, Glinton Sweeting O’Brien
10.8 Cryptocurrency Derivatives The offering of cryptocurrency derivatives (or rather digital asset derivatives) is regulated under the DARE Act 2024. Digital asset derivatives (such as options, futures, swaps, and contracts for difference) are rec - ognised as instruments whose value is derived from an underlying digital asset. Any entity providing digital asset derivative services, including operating a deriva - tive exchange, creating or selling derivative contracts, or providing clearing and settlement services, must be registered as a digital asset business with the Securi - ties Commission. These providers are subject to the DARE Act 2024’s regulatory framework, including licensing, fit-and-proper requirements for operators, and compliance with governance, risk management, and operational standards. They must also maintain adequate capital, internal controls, and policies such as AML/CFT/CPF procedures as part of the registra - tion process. The Securities Commission supervises these activities and may enforce compliance or revoke registration where the provider breaches the DARE Act 2024 or fails to meet regulatory standards. 10.9 Decentralised Finance (DeFi) To the extent that a DeFi product can be classified as a security token under the provisions of the SIA, it is regulated under the SIA and not under the DARE Act 2024. The SIA does not exempt security tokens from regulation on the basis that it does not involve intermediaries. 10.10 Regulation of Funds Funds that invest in blockchain assets are regulated as investment funds pursuant to the Investment Funds Act. The Investment Funds Act does not distinguish between asset classes for the purposes of regulation. 10.11 Virtual Currencies The issuance of virtual currencies falls within the pur - view of the Central Bank, which is the sole authority for issuing virtual currencies under the Central Bank of The Bahamas Act. 10.12 NFTs As of the date of publication, NFTs and NFT platforms are not subject to regulation in The Bahamas.
may only be carried out by entities registered with the Securities Commission. Applicants seeking to provide staking services must submit detailed information to the Securities Commission, including the staking pro - tocol, consensus mechanism, lock-up periods, reward structure, redemption process, and any potential penalties for participants. Registered providers must disclose this information to clients before onboarding and warn them of risks such as possible loss of value, hacking, lack of insurance protection, and potential tax liabilities. Where staking services involve custody of clients’ digital assets, the provider must also com - ply with the DARE Act’s additional regulatory require - The provision of lending services relating to digital assets is regulated under the DARE Act 2024 when it forms part of a digital asset business activity. Any entity offering services such as lending, borrowing, or otherwise facilitating the use of digital assets must apply to be registered with the Securities Commission as a digital asset business and comply with the DARE Act’s licensing, governance, and operational require - ments. These providers must maintain adequate risk management systems, internal controls, and disclo - sures to ensure that clients understand the nature and risks of the services offered. ments for digital asset custodians. 10.7 Crypto-Related Lending In addition, services such as staking, which involve locking digital assets in a blockchain protocol to sup - port network validation in exchange for rewards, are specifically regulated as a form of digital asset service. Providers offering staking services must disclose key information to clients, including the staking protocol used, reward structure, lock-up periods, penalties, and risks such as loss of value or hacking. Where the provider holds or controls clients’ digital assets as part of the lending or staking arrangement, the pro - vider must also comply with the DARE Act’s custody requirements, including safeguards for the protection and segregation of client assets. Overall, the DARE Act 2024 regulates these services by requiring regis - tration, disclosure, and prudential safeguards to pro - tect users and maintain market integrity.
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