:format(jpg)/cloudfront-us-east-1.images.arcpublishing.com/coindesk/JTSJIDF53RBFPP62M6Y5KT25XM.jpg "Bahamas to tighten cryptocurrency regulations in response to recent FTX crash")
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The Bahamas is proposing tougher rules to govern digital asset activity, five months after the collapse of cryptocurrency exchange giant FTX brought the island nation to the world's attention.
The country's financial regulator, the Bahamas Securities Commission, released a statement on Tuesday announcing the opening of consultations on proposed new rules. The Digital Assets and Registered Exchange (DARE) Act includes an expanded definition of digital asset activity, disclosure requirements for cryptocurrency exchange activities, and stricter requirements for issuers of stable metals.
The collapse of FTX last year led to repeated attacks on Bahamian authorities by John Ray III, who was appointed after the resignation of head of the exchange and the subsequent arrest of founder Sam Bankman-Fried.
Bahamas Proposes Changes to Digital Assets Law, Including Ban on Algorithmic Stablecoins
FTX's new management said in legal filings that there is evidence that the Bahamian government ordered unauthorized access to the exchange's systems "for the purpose of acquiring digital assets" to be controlled by FTX. In response, SCB denied Ray's "significant inaccuracies".
The DARE bill includes a specific provision that "digital asset exchange operators must ensure that the systems and controls used in its operations are adequate and appropriate for the purposes and nature of the operation" for anyone considering following e Bankman - Fry and steps : operate a Bahamian cryptocurrency exchange.
The Securities Commission of The Bahamas (SCB) has announced proposed changes to the DARE (Digital Assets and Registered Exchanges) Act, which include a ban on the issuance of algorithmic stablecoins. This decision follows the collapse of TerraUSD in May 2022. The changes also aim to strengthen safeguards, such as new disclosure and reporting requirements, specific registration obligations and ongoing monitoring of operators' digital asset space.
According to SCB, these improvements will enable digital asset firms to innovate and scale, while allowing the Commission to set additional rules for digital asset trading and customized requirements for different categories of registrants. The comment period for the proposed changes will end on May 31, and the authorities intend to approve the bill by the end of the second quarter.
The FCA is looking to work with crypto companies to develop a regulatory framework
In other developing news , the Financial Conduct Authority (FCA) , the UK's financial regulator, is looking to work with cryptocurrency companies to create a regulatory framework for the industry. Speaking at the City Week conference in London on April 25, FCA Chief Executive Sarah Pritchard emphasized the importance of cooperation in the regulation of cryptoassets.
In her #CityWeek2023 keynote, Sarah Pritchard talked about #cryptocurrency regulation and how effective early engagement can support regulation that benefits everyone. https://t.co/w6Zv6K5FP1
— Financial Conduct Authority (@TheFCA) April 25, 2023
Pritchard acknowledged that while cryptocurrencies were once seen as symbols of alternative rebellion, they have become more mainstream in recent times. He also added that timely dialogue with industry stakeholders will facilitate the development of favorable regulations and enable companies to prepare for the implementation of these regulations.
During his speech, Pritchard highlighted the difference in approach between the FCA and US financial regulators, who he said are actively seeking to suppress the cryptocurrency industry through enforcement rather than working with industry leaders to develop regulations. He said the FCA's current responsibilities are limited to ensuring UK-based crypto firms comply with AML and CTF legislation.
Pritchard also said that tangible changes in the industry will only come from government legislation, including regulations on cryptocurrency promotion and high-risk investment advertising. In addition, he noted that while the FCA registered 41 crypto firms of all sizes, almost three-quarters of a total of 195 foreign firm registrations had their UK license applications refused or withdrawn.
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