Letters

FTX and the DARE Act

Dear Editor,

When the full set of circumstances relating to FTX are taken together, The Bahamas will not have more than any other country to be ashamed of.

 At least not yet.

 If we fail to take immediate action that will minimize the likely re-occurrence of such events while adopting a more traditional set of policies to promote and regulate various aspects of distributed ledger technology, then we would have failed.

 Regrettably, jurisdictions around the world are allowing activities within the sector, the vast of which are best described as hogwash (apologies to hogwash), to run amok and to get ahead of regulations.

 The consequence being that regulators are taking a more accommodative than regulatory posture.

 Many have allowed themselves to be convinced that economic value can be generated without the production of goods or services of any kind.

 So, what should The Bahamas do?

 We need to immediately cease the issuance of new licenses under the DARE Act until after substantial amendments are made.

 In addition, all existing licensees should be assessed to ascertain the robustness of their controls and their adherence to fundamental fiduciary principles.

 The key amendments to the act should include disallowing any entity from conducting both exchange and broker functions; minimizing the likelihood of circular dealing by forbidding exchanges and brokers from selling digital assets owned by them; permitting the registration of only those digital assets with underlying assets (tangible or intangible) that effectively support their valuations; and requiring the publication of quarterly information and annual audited reports for all exchanges, brokers and digital assets.

 Finally, The Bahamas must make clear that while its legislative regime will help to advance and promote distributed ledger technology, it will not be used as a playground for cryptocurrency speculation.

— Lindon Nairn

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