The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Prime Minister yesterday pledged that “the lessons we learned” from the FTX crypto exchange’s collapse will enable The Bahamas to better strengthen its regulatory regime and emerge as a regional digital assets hub.

Philip Davis KC, speaking at a financial technology (fintech) summit organised by MasterCard, conceded that The Bahamas had been “put to the test by the unprecedented situation” created by FTX’s failure but argued that the experience will serve the country well as it moves to upgrade the Digital Assets and Registered Exchanges (DARE) Act - the centrepiece of its digital assets supervisory framework.

“When put to the test by the unprecedented situation with FTX, our regulations ensured that immediate and effective action was taken to appoint joint liquidators and secure assets, which are now under the control of the Bahamian regulator,” Mr Davis said, referring to the Securities Commission.

“The lessons we learned in the wake of FTX will only strengthen our DARE framework in the long-term and propel our digital assets sector forward. New amendments to the legislation include, among other things, measures to clarify the regulation of stablecoins, more robust investor and consumer protection mechanisms, and the regulation of staking for digital asset-related mining in The Bahamas.

“We are innovating, not only in response to our own experiences and insights, but in anticipation of the direction that the industry is headed.” Mr Davis added that creating an “effective regulatory framework” is key to The Bahamas’ long-term success in fintech and digital assets.

“In The Bahamas, our Digital Assets and Registered Exchanges (DARE) Act is hailed as one of the most rigorous and effective frameworks in the world,” he argued. “The DARE framework reflects global best practices with an added touch of Bahamian innovation, positioning us a world leader in the regulation of digital assets.

“The legislation is comprehensive and provides clarity and oversight without stifling innovation. It is also highly responsive. We knew we needed an approach that was highly adaptive to keep pace with industry changes. Recognising the importance of staying ahead of the curve, we intend to pass a series of amendments to the DARE Act this year with the Digital Assets Registration and Exchanges Bill 2023.

“The revamped regime aims to encompass lessons learned globally since the introduction of DARE and to situate The Bahamas at the forefront of the rapidly-evolving digital asset regulatory space with an even stronger, more comprehensive regulatory framework.”

Mr Davis said The Bahamas’ history and experience as an international financial centre (IFC) have left it and others “well-positioned to serve as strategic industry hubs for digital assets enterprises doing business throughout the Americas”. He added: “Our ability to adapt our regulatory framework to the most stringent global standards, while building a competitive financial services product that appeals to clients from around the globe, makes us the ideal jurisdiction for emerging fintech opportunities.

“In fact, the very survival of our financial services industry hinges on our ability to innovate and adapt to emerging trends. The integration of fintech is the next step in our continued evolution as a leading financial services jurisdiction.... We believe digital technologies can play a large role in the new Bahamian economy that is emerging.”

The Prime Minister continued: “We all find ourselves competing in a rapidly-changing world that demands we get with the times or risk finding ourselves on the outside looking in. We are all working toward the digital transformation of businesses, societies and governments.

“For our part, the Government of The Bahamas has seen tremendous success with the launch of the MyGateway platform, which provides centralised online access to over 200 government services. This platform is a central component of a wider government push to expand access to public services while improving transparency, strengthening auditing and control mechanisms, and enhancing security.

“If a government cannot embrace digitisation within its own systems, how can it truly welcome the digital innovation that marks our modern era? Government cannot rightly be said to have embraced digital innovations if its own systems are not a part of the wider digital ecosystem. Our digital transformation agenda will make The Bahamas more competitive on the global stage.”