Bahamas Securities Regulator Proposes Crypto Regulatory Framework

News, Regulation | May 20, 2019 By:

The Securities Commission of The Bahamas (SCB) has published a draft of a bill aimed at regulating token offerings.

Titled Digital Assets and Registered Exchanges Bill 2019 (DARE Bill), the draft seeks to regulate token offerings that are not considered securities, and aims to provide participants in the digital token space with clear rules to adhere to.

“The DARE Bill provides for the regulation of the issuance and sale of digital tokens, and for the regulation of the conduct of those issuing digital tokens and those providing intermediary services related to the issuance of digital tokens,” SCB said. “The Bill applies to any person who as organizer, issuer, founder, sponsor, wallet provider, exchange, purchaser or investor participates in the formation, promotion, maintenance, organization, sale or redemption of an initial token offering.”

The bill requires crypto projects to publish a memorandum with a description of the project. It should be signed by the token sponsor, who is a counsel or attorney at law.

“For the purpose of preparing the offering memorandum pursuant to section 8(3)(a), an issuer shall have a duty to provide full and accurate disclosure of all information which would allow potential purchasers to make an informed decision,” SCB said. “Every offering memorandum published in connection with an initial token offering shall – (a) be signed by every founder and member of the issuer’s board; and (b) address the matters specified in Part II of the First Schedule.”

Additionally, the bill requires that participants adhere to established anti-money laundering (AML) and counter-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.

“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,” said SCB Executive Director Christina Rolle.

Rolle added that they anticipate that while non-security tokens will not be directly approved for issuance by the commission, 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,” Rolle said.”