Securities commission completes draft cryptocurrency legislation
The Securities Commission of The Bahamas (SCB) has completed draft legislation designed to regulate the fast-growing cryptocurrency segment of the financial services sector.
A statement issued yesterday by the SCB on the draft legislation notes that the legislation would manage “the issuance or sale of digital tokens in or from within The Bahamas and how sellers and intermediary service providers conduct themselves”.
The draft Digital Assets and Registered Exchanges Bill, 2019 (DARE Bill) is currently out for public consultation and will be for eight weeks.
“The bill proposes a legislative structure with standards for entry into and participation in the digital token space,” the statement points out.
“These requirements stipulate who may participate, the level of capital required, the rules for reporting and seeking the commission’s approval and the penalties for failure to comply.
“Additionally, the proposed legislation requires that participants adhere to established anti-money laundering (AML) and countering the financing of terrorism (CFT) laws, ensure data protection measures related to the personal information of clients and implement measures to prevent data breaches that would jeopardize clients’ crypto assets.”
Chairman of the SCB Robert Lotmore said in the statement that the legislation is only the first of a series needed to comprehensively regulate the cryptocurrency market in The Bahamas.
The draft legislation aims to establish a comprehensive approach to crypto assets regulation.
Lotmore added that the SCB has worked closely with the industry to develop its regulatory framework and a comprehensive policy position paper will soon be released.
SCB Executive Director Christina Rolle said because of the growing interest in cryptocurrency-related business, it was prudent for the SCB to ensure this country had regulations in place.
“Over the last year, the number of queries the jurisdiction has received from entrepreneurs interested in venturing into this form of capital raising has mandated that the jurisdiction ensure legislative and regulatory parameters are in place to address how operators conduct themselves and how token issues come to market,” Rolle said.
“The bill establishes a framework for the regulation of digital token issuances in or from within The Bahamas. We anticipate that while non-security tokens will not be directly approved for issuance by the SCB, the SCB will have some level of oversight. Issuance of security tokens, that is, tokens which meet criteria to be deemed securities, will require direct approval by the commission.”
The statement adds that the framework opens the door for the regulations and therefore introduction of custodians and wallet services, and paves the way for their regulation.
“The legislation’s requirements for crypto exchanges are applicable to not only fiat-to-crypto exchanges, but also crypto-to-crypto exchanges as well as both centralized and decentralized exchanges,” the statement points out.
JUMPLINE: Bill aims to establish comprehensive approach to crypto assets regulation