BAHAMAS Law and Practice Contributed by: Dwayne Whylly, Kamala Richardson-Deal and Nastassia Rigby-Rodriguez, Glinton Sweeting O’Brien
10.13 Stablecoins The issuance of stablecoins is regulated under the DARE Act 2024. The DARE Act requires that issuers of stablecoins must provide detailed disclosures in the offering memorandum, including the stabilisa - tion mechanism, reserve asset composition, custody arrangements, and redemption policies. They must ensure that stablecoins are fully backed by reserve assets which are segregated from client assets, held in appropriate custody arrangements, readily liquid, and ringfenced from the issuer’s creditors. Issuers are also required to undergo regular independent audits and quarterly proof-of-reserve examinations, as well as maintaining clear redemption rights allowing hold - ers to redeem the stablecoin 1:1 for the underlying asset. Additionally, the Securities Commission has the authority to restrict, halt, or delist a stablecoin, and issuers must verify a holder’s identity before process - ing redemption requests. At present the concept of open banking is not sub - ject to specific regulation in The Bahamas. However, depending on the activities involved, open banking may be regulated by the Banks and Trust Companies Regulation Act 2020 (BTCRA) and the PSA. To the extent that a facilitator of an open banking arrange - ment generally conducts banking business as defined in the BTCRA, it is required to hold a banking licence pursuant to the provisions of the BTCRA. The PSA regulates payments systems, which are defined therein as “a formal arrangement with common rules and standardized arrangements for the execu - tion of transfer orders, between participants, including a clearing house, the settlement of payments relating to securities, or for the processing, clearing or set - tling of payment transactions or payment messages between: (a) three or more participants; or (b) two or more participants provided the formal arrangement between these participants is designated by the Cen - tral Bank as a payment system pursuant to the PSA.” 11. Open Banking 11.1 Regulation of Open Banking
11.2 Concerns Raised by Open Banking Open banks and technology providers are subject to duties of confidentiality under Bahamian law. Depend - ing on the nature of activities of the facilitator, they may be subject to a combination of duties of confi - dentiality. Where a facilitator of open banking meets the com - mon law test of financial institution it is subject to a common law duty of confidentiality. This common law duty imposes an obligation to keep account informa - tion and the affairs of the financial institution’s clients confidential, subject to the limited disclosure excep - tions of: • disclosures required by compulsion of law; • disclosures in the public interest; • disclosures to protect the interests of the financial institution; and • disclosures made with the express or implied consent of the client (see Tournier v National and Provincial Union Bank of England [1924] 1 KB 461). Where a facilitator of open banking is a bank licensed under the BTCRA, it is subject to the statutory duty of confidentiality imposed by the BTCRA, which pro - hibits persons including directors, officers, employ - ees and agents of a bank from disclosing information relating the identity, assets, liabilities, transactions or accounts of the bank’s clients. This duty is subject to a limited number of exceptions, which are similar to the exceptions to the common law duty. Where a facilitator of open banking collects or pro - cesses personal data in The Bahamas, it is subject to the statutory duty of confidentiality imposed by data protection legislation, namely, the DPA, which requires data processors to keep the personal information of data subjects confidential. This legislation also impos - es penalties for any unauthorised disclosure. 12. Fraud 12.1 Elements of Fraud The general position with respect to fraud is:
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