Bahamas
Retail_Trading_Status
- Analysis ID
- #602
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- Latest
- Created
- 2025-12-12 03:53
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- c34a270d...
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Executive Summary
Retail cryptocurrency trading is legal and comprehensively regulated in The Bahamas under the Digital Assets and Registered Exchanges (DARE) Act, 2024. The Securities Commission of The Bahamas (SCB) serves as the primary regulator, enforcing a strict licensing regime for exchanges, custodians, and wallet providers. Following the collapse of FTX, the regulatory framework was significantly tightened in July 2024 to include specific mandates for digital asset custody, staking, and a ban on algorithmic stablecoins. While residents can legally trade, they are subject to exchange control regulations when using Bahamian dollars (B$) to fund foreign asset purchases, including crypto.
Key Pillars
Securities Commission of The Bahamas (SCB) as the primary regulator for digital assets
Mandatory registration for all Digital Asset Businesses (DABs) operating in or from The Bahamas
Strict AML/CFT/KYC compliance aligned with FATF standards
Exchange Control Regulations enforced by the Central Bank of The Bahamas for fiat-to-crypto conversions
Landmark Laws
Digital Assets and Registered Exchanges (DARE) Act, 2024 (DARE Act 2024) - Enacted: 2024-07-30
- Repealed and replaced the 2020 Act; introduces comprehensive frameworks for stablecoins, staking, and custody. Explicitly bans the issuance of algorithmic stablecoins and privacy tokens.
- Source
Digital Assets and Registered Exchanges Act, 2020 (DARE Act 2020) - Enacted: 2020-12-14
- The original framework that established the legal regime for digital assets; now repealed by the 2024 Act but historically significant for establishing the initial licensing regime.
Financial Transactions Reporting Act, 2018 (FTRA 2018) - Enacted: 2018-05-25
- Establishes the AML/CFT obligations for financial institutions, including registered digital asset businesses.
Considerations
Algorithmic stablecoins are expressly prohibited from issuance.
Privacy tokens cannot be issued, though trading existing ones is subject to strict compliance.
Residents using Bahamian Dollars (B$) to buy crypto must utilize the Investment Currency Market (ICM) and pay associated premiums/fees, as crypto is classified as a 'foreign asset'.
Custody requirements were significantly strengthened post-FTX to ensure segregation of client funds.
Staking services are now a regulated activity requiring specific disclosure and management protocols.
Notes
The Bahamas was the first country to launch a CBDC, the 'Sand Dollar', which is distinct from the crypto assets regulated under the DARE Act. The Sand Dollar is a digital version of the fiat currency regulated by the Central Bank, whereas private crypto assets fall under the SCB.
Remaining Uncertainties
- Specifics on the 'Investment Currency Market' premium rates for retail crypto purchases in 2025.
- The exact operational status of all entities listed on the SCB register (active vs. merely registered).
Detailed Explanation
Detailed Explanation
Retail cryptocurrency trading is legal and comprehensively regulated in The Bahamas. The primary legal framework is the Digital Assets and Registered Exchanges (DARE) Act, 2024, enacted on July 30, 2024, which repealed and replaced the original DARE Act of 2020. This legislation establishes a strict licensing regime for all Digital Asset Businesses (DABs), including exchanges, custodians, and wallet providers, under the oversight of the Securities Commission of The Bahamas (SCB) as the primary regulator. The framework mandates full compliance with Anti-Money Laundering, Counter-Terrorist Financing, and Know-Your-Customer (AML/CFT/KYC) standards, as outlined in the Financial Transactions Reporting Act, 2018 (FTRA 2018). The regulatory environment was significantly tightened in the 2024 update following the collapse of FTX, introducing specific and robust requirements for digital asset custody and staking services to enhance consumer protection and market integrity. In addition to the SCB's oversight, the Central Bank of The Bahamas enforces Exchange Control Regulations, which directly impact residents. When Bahamian citizens use the local currency, the Bahamian dollar (B$), to purchase cryptocurrency—which is classified as a 'foreign asset'—they must do so through the Investment Currency Market (ICM), incurring associated premiums and fees. This dual-layer regulatory approach ensures that while cryptocurrency trading is permitted, it operates within a controlled financial ecosystem. The framework also includes explicit prohibitions: the issuance of algorithmic stablecoins is expressly banned under the DARE Act, 2024, and while the trading of existing privacy tokens is subject to strict compliance, their issuance is also prohibited. It is important to distinguish private crypto assets, regulated by the SCB, from the 'Sand Dollar', a central bank digital currency (CBDC) issued by the Central Bank, which represents a digital form of the sovereign fiat currency and operates under a separate regulatory paradigm.
Summary Points
I. Regulatory Status
* Retail cryptocurrency trading is Allowed-Regulated in The Bahamas.
* It operates under a comprehensive and strict legal framework.
II. Key Regulatory Bodies
* Securities Commission of The Bahamas (SCB)
* Serves as the primary regulator for digital assets and Digital Asset Businesses (DABs).
* Enforces licensing and ongoing compliance under the DARE Act.
* Central Bank of The Bahamas
* Enforces Exchange Control Regulations for fiat-to-crypto conversions involving Bahamian dollars (B$).
* Regulates the 'Sand Dollar' CBDC, which is distinct from privately-issued crypto assets.
III. Important Legislation
* Digital Assets and Registered Exchanges (DARE) Act, 2024
* Enacted on 2024-07-30; the current primary law.
* Repealed and replaced the 2020 Act.
* Introduces comprehensive frameworks for stablecoins, staking, and custody.
* Explicitly bans the issuance of algorithmic stablecoins and privacy tokens.
* Digital Assets and Registered Exchanges Act, 2020
* Enacted on 2020-12-14; now repealed but historically significant for establishing the initial licensing regime.
* Financial Transactions Reporting Act, 2018 (FTRA 2018)
* Enacted on 2018-05-25.
* Establishes the AML/CFT obligations for financial institutions, including registered digital asset businesses.
IV. Compliance Requirements
* Mandatory registration and licensing for all Digital Asset Businesses (DABs) operating in or from The Bahamas.
* Strict AML/CFT/KYC compliance aligned with FATF standards, as per the FTRA 2018.
* Residents using Bahamian Dollars (B$) to buy crypto must utilize the Investment Currency Market (ICM) and pay associated premiums/fees, as crypto is classified as a 'foreign asset'.
* Custody requirements were significantly strengthened post-FTX to ensure segregation of client funds.
* Staking services are a regulated activity requiring specific disclosure and management protocols under the DARE Act, 2024.
V. Notable Restrictions or Limitations
* The issuance of algorithmic stablecoins is expressly prohibited.
* The issuance of privacy tokens is prohibited, though trading existing ones is subject to strict compliance.
* Fiat on-ramps using Bahamian dollars are subject to exchange control regulations via the ICM.
VI. Recent Developments or Notes
* The DARE Act was significantly tightened and updated in July 2024, largely in response to the collapse of FTX.
* The Bahamas was the first country to launch a CBDC, the 'Sand Dollar', which is a digital version of the fiat currency regulated by the Central Bank and is distinct from the private crypto assets regulated under the DARE Act by the SCB.
Full Analysis Report
Full Analysis Report
The regulatory status of retail cryptocurrency trading in The Bahamas is 'Allowed-Regulated,' characterized by one of the world's most specific and recently updated legislative frameworks. The primary governing law is the Digital Assets and Registered Exchanges (DARE) Act, 2024, which was enacted on July 30, 2024. This legislation replaced the pioneering 2020 Act, specifically addressing gaps identified following the high-profile collapse of FTX, which was headquartered in the jurisdiction. The Securities Commission of The Bahamas (SCB) retains its role as the sole regulator for the industry, maintaining a public register of licensed Digital Asset Businesses (DABs).
Under the DARE Act 2024, any entity facilitating retail trading, custody, staking, or wallet services must register with the SCB. The new Act introduces rigorous standards for digital asset custody, mandating the strict segregation of client assets from proprietary funds—a direct response to the commingling issues seen in previous market failures. Furthermore, the Act expands the regulatory perimeter to include advice, management, and staking services, ensuring that retail investors are protected across a broader spectrum of activities. Notably, the Act takes a hard line on certain asset classes, explicitly banning the issuance of algorithmic stablecoins and privacy tokens to mitigate systemic and financial crime risks.
For local retail investors, while trading is legal, it intersects with the nation's Exchange Control regime. The Central Bank of The Bahamas classifies cryptocurrencies as 'foreign assets.' Consequently, residents wishing to purchase crypto assets using the local currency (Bahamian Dollar) must generally access foreign exchange through the Investment Currency Market (ICM), which may involve premiums and regulatory approval. This creates a two-tiered experience where international users of Bahamian-registered platforms enjoy seamless access, while local residents face friction related to capital controls.
The enforcement environment is active and visible. The SCB publishes a list of registrants (which includes major entities like Bitfinex Tech Inc. and Galaxy Bahamas Ltd.) and has demonstrated its authority by suspending non-compliant entities. The framework is designed to be fully compliant with FATF recommendations, requiring all DABs to implement robust AML/CFT programs. The 2024 updates solidify The Bahamas' strategy to remain a top-tier crypto hub by prioritizing reputational safety and consumer protection over unregulated growth.
The regulatory status of retail cryptocurrency trading in The Bahamas is 'Allowed-Regulated,' characterized by one of the world's most specific and recently updated legislative frameworks. The primary governing law is the Digital Assets and Registered Exchanges (DARE) Act, 2024, which was enacted on July 30, 2024. This legislation replaced the pioneering 2020 Act, specifically addressing gaps identified following the high-profile collapse of FTX, which was headquartered in the jurisdiction. The Securities Commission of The Bahamas (SCB) retains its role as the sole regulator for the industry, maintaining a public register of licensed Digital Asset Businesses (DABs). Under the DARE Act 2024, any entity facilitating retail trading, custody, staking, or wallet services must register with the SCB. The new Act introduces rigorous standards for digital asset custody, mandating the strict segregation of client assets from proprietary funds—a direct response to the commingling issues seen in previous market failures. Furthermore, the Act expands the regulatory perimeter to include advice, management, and staking services, ensuring that retail investors are protected across a broader spectrum of activities. Notably, the Act takes a hard line on certain asset classes, explicitly banning the issuance of algorithmic stablecoins and privacy tokens to mitigate systemic and financial crime risks. For local retail investors, while trading is legal, it intersects with the nation's Exchange Control regime. The Central Bank of The Bahamas classifies cryptocurrencies as 'foreign assets.' Consequently, residents wishing to purchase crypto assets using the local currency (Bahamian Dollar) must generally access foreign exchange through the Investment Currency Market (ICM), which may involve premiums and regulatory approval. This creates a two-tiered experience where international users of Bahamian-registered platforms enjoy seamless access, while local residents face friction related to capital controls. The enforcement environment is active and visible. The SCB publishes a list of registrants (which includes major entities like Bitfinex Tech Inc. and Galaxy Bahamas Ltd.) and has demonstrated its authority by suspending non-compliant entities. The framework is designed to be fully compliant with FATF recommendations, requiring all DABs to implement robust AML/CFT programs. The 2024 updates solidify The Bahamas' strategy to remain a top-tier crypto hub by prioritizing reputational safety and consumer protection over unregulated growth.
Source Evidence
Primary and secondary sources cited in this analysis
"Licensees and registrants under... the Digital and Registered Exchanges Act, 2024 are listed by legislation below."
"On 30 July 2024, the Parliament of The Bahamas passed into law the Digital Assets and Registered Exchanges Act, 2024 (DARE 2024)... prohibiting the issuance of algorithmic stablecoins."
"Unless they are denominated in Bahamian dollars and sponsored by resident entities, the Central Bank views crypto assets as foreign assets for EC purposes."
"The Act replaces the Digital Assets and Registered Exchanges Act, 2020... mandating that Digital Asset Businesses, including exchanges, custody services, and staking operations, must be registered."
Web Sources (6)
Sources discovered via web search grounding
Search queries used (5)
- Bahamas DARE Act 2024 status
- DARE Act 2024 key changes summary
- Securities Commission of The Bahamas digital assets registrant list
- Bahamas crypto retail trading regulation
- Central Bank of The Bahamas crypto position
https://ewnews.com/scb-announces-enactment-of-dare-act-elevating-digital-asset-regulation-standards/
https://www.xreg.consulting/articles/the-bahamas-enters-the-next-phase-of-crypto-market-regulation
https://eli-uk.com/news/the-bahamas-dare-act-2024-a-comprehensive-guide-to-the-digital-asset-regulation/
https://financialpost.com/pmn/business-wire-news-releases-pmn/the-bahamas-introduces-transformative-digital-asset-legislation-the-dare-act-2024
https://freemanlaw.com/cryptocurrency/bahamas-and-cryptocurrency/
https://cdn.centralbankbahamas.com/download/023817800.pdf