Cryptocurrency regulations outlined in DARE Bill

After months of review, the Digital Assets and Registered Exchange Bill, 2020 (DARE Bill) – which would pave the way for the issuance and trading of cryptocurrency in The Bahamas – has been completed.

The DARE Bill 2020, obtained by Guardian Business, lays out the legislative framework under which sellers and intermediary service providers of digital tokens must conduct themselves.

It outlines a general penalty on summary conviction of a fine not exceeding $500,000 or imprisonment up to five years for any person who commits an offense under the act.

Failure to adhere to the act, it states, could also result in administrative sanctions not limited to a public reprimand, the banning of carrying out certain operations, the temporary suspension of a manager, the removal of an officer or executive team member and also registrant restrictions, among other things.

The bill has defined a digital asset as a digital representation of value distributed through a distributed ledger technology (DLT) platform (or a blockchain) where value is embedded or in which there is a contractual right of use and includes without limitation digital tokens.

Businesses that provide digital token exchange, sponsorship of an initial token offer, custodial wallet services, digital custody services and the transferring of digital assets, among other things, would be required to register with the Securities Commission of The Bahamas (SCB), which would have regulatory control over digital assets and digital asset business and activity, as well as the development and maintenance of investor protection standards.

The SCB would also have to maintain and register digital asset businesses and would be solely responsible for the approval of the expansion of a registrant’s scope of activities, the issuance of new tokens, the merging of entities, the appointing of new directors and the termination or replacement of wallet service providers,

Registrants would be required to implement data protection measures which provide protocols for the collection and storage of data, the prevention of unauthorized access or alteration of personal data and for the rectification or erasure of any data which is inaccurate upon the written request of an affected person.

“Every registrant shall be required to implement and enforce a cybersecurity program. Every registrant shall engage an information security officer who shall be responsible for overseeing and implementing the registrant’s cyber security program and enforcing its cyber security policies,” the bill states.

“Every registrant shall on annual basis file with the commission a written report prepared by its information security officer, assessing the availability, functionality and integrity of its electronic systems; any identified cyber risk arising from any digital asset business carried on or to be carried on by the licensed undertaking; the cyber security program implemented and proposals for steps for the redress of any inadequacies identified; a summary of any cyber security events which occurred in the preceding year and the steps taken to address the event and to prevent a recurrence.”

This goes hand in hand with the bill’s requirement that digital asset businesses provide proper risk management for the prevention of money laundering and terrorism financing.

The draft Digital Assets and Registered Exchanges Bill, 2019 went out for public consultation last April, which would have lasted eight weeks.

Guardian Business is uncertain when the revised bill will be tabled in Parliament.