Ultimate Guide to Bahamas Crypto Regulation: DARE Act 2024 Explained
Introduction
In the aftermath of the global FTX collapse, the Bahamas has taken bold action to strengthen its position in the crypto world. On July 30, 2024, the country’s Parliament enacted the Digital Assets and Registered Exchanges (DARE) Act 2024, marking a major leap forward in Bahamas crypto regulation.
Pay 0% Tax Legally — Start Your Tax-Free Strategy Today
Even in low-tax jurisdictions, most investors still overpay.
Our elite partner tax law firms specialize in advanced legal structures that can reduce your effective tax rate to as low as 0%, fully compliant, audit-ready, and tailored to your profile.
Crypto-friendly. International. Proven.
The DARE Act 2024 builds on its 2020 predecessor, expanding legal cover to a comprehensive array of digital-asset activities, and sending a clear signal: the Bahamas is serious about licensing, consumer protection, and market integrity .
Who this guide is for:
- VASPs, including exchanges, custodians, advisors, staking platforms, navigating licensing and compliance
- Investors seeking clarity on stablecoin bans, custody regulations, staking disclosures, and the role of Sand Dollar CBDC
- Crypto operators exploring offshore operations under a robust regulatory umbrella
By analysing the DARE Act’s specifics, licensing rules, custody frameworks, staking requirements, stablecoin restrictions, and CBDC integration, this guide offers a practical, authoritative resource.
Why This Matters Now
- Global benchmark – DARE 2024 is designed to match international standards from IOSCO, FATF, and other standard-setting bodies.
- Investor protection & innovation – Enhances accountability, mandates disclosures and financial reporting, and supports responsible industry growth.
- Regulatory foresight – Introduces forward-looking provisions for stablecoins, privacy tokens, staking, and CBDC adoption, making the Bahamas an ideal crypto com‑pliance hub.
What Is the DARE Act 2024?
On July 30, 2024, the Bahamas’ Parliament passed the Digital Assets and Registered Exchanges (DARE) Act 2024, ushering in a sweeping regulatory framework for digital assets.
✅ Expanded Scope of Digital Asset Activities
Previously limited to exchanges and token issuance under the 2020 law, DARE Act 2024 now covers 17 classes of digital-asset activities to strengthen Bahamas crypto regulation. These include advisory and management services, custody, staking, derivatives, payment services, and more, with the flexibility to add new types as the market evolves.
🔒 Enhanced Exchange and Custody Standards
Digital asset exchanges must now meet robust investor-protection rules, including real-time transaction reporting, stronger operational controls, and enhanced system resilience.
Custody of digital assets, via wallets or custodial services, is also brought under regulation, ensuring client ownership rights and asset accessibility.
📊 Pioneering Staking Disclosures
For the first time, staking services are subject to a regulatory disclosure regime, requiring clear reporting on staking methods, reward mechanisms, and associated risks, a global first.
💲 Comprehensive Stablecoin Framework
The Act introduces a stablecoin definition and registration regime, mandating transparent reserves, asset segregation, and redemption policies. Importantly, algorithmic stablecoins are explicitly banned.
🚫 Privacy Tokens & PoW Mining Restrictions
Issuers of privacy-enhancing tokens are now prohibited, reflecting a commitment to transparency and compliance . Additionally, restrictions apply to proof-of-work mining except under narrow in-house or ancillary operations.
📌 Quick Takeaway – In 3 Points
- Broader oversight over nearly all digital-asset activities, from custody to staking and beyond.
- Strict controls and disclosure obligations for exchanges, stablecoins, and custody.
- Ban on high-risk tokens, with a firm stance on privacy tokens, algorithmic stablecoins, and unchecked mining.
Licensing & Fit‑and‑Proper Requirements
Under the DARE Act 2024 Bahamas crypto regulation, any entity seeking to function as a Virtual Asset Service Provider (VASP), including exchanges, custodians, fund managers, advisors, and staking platforms, must register with the Securities Commission of The Bahamas (SCB) and meet strict “fit-and-proper” standards.
🛡️ Registration & Regulator Authority
- Mandatory registration under Section 9 ensures that all DABs, from exchanges to token issuers, are licensed by the SCB.
- The SCB acts as the sole regulator, tasked with licensing, monitoring, guiding, and educating DABs to support innovation while enforcing protection standards.
✅ Fit‑and‑Proper Standards
Applicants must demonstrate:
- Corporate governance: qualified directors, transparent ownership, and integrity.
- Financial strength: sufficient capital, insurance coverage (professional indemnity, cybersecurity, custodial, D&O) to cushion operational risks.
- Operational competency: strong internal controls, AML/CFT procedures, KYC protocols, transaction monitoring capabilities, and suspicious‑activity reporting.
🧾 Market Conduct & Investor Disclosure
Fund managers and advisors are held to rigorous market conduct rules under Sections 68 & 71:
- Insurance against market abuse: prohibition on insider trading, price manipulation, and misuse of non-public information.
- Risk disclosures: mandatory transparent communication to clients about asset volatility, staking mechanisms, and consumer protections (Segregation of assets, redemption processes) .
🏦 Custody & Wallet Services
Custodians offering wallet or asset-holding services must secure licenses under both:
- The DARE Act (Bahamas regulatory framework), regulating broader custody activities; and
- The Financial and Corporate Service Providers Act (FCSPA), governing wallet and asset protection standards.
They must segregate client funds, implement technical and insurance safeguards, conduct annual system audits, and provide clients with regular asset statements.
📌 Key Takeaways
- All VASPs must register with the SCB and pass stringent fit-and-proper evaluations.
- Governance, capital, insurance, AML/KYC systems are non-negotiable prerequisites.
- Custodial and wallet providers face dual-layer licensing, ensuring high standards for client assets.
Custody, Staking & Exchange Controls
The DARE Act 2024 introduces a robust regulatory framework for custody, staking, and exchange operations, ensuring transparent, secure, and client-first digital asset services.
🔐 Custody & Wallet Regulations
- Regulated custody: Custodial wallet services and asset holding are now officially regulated under DARE 2024, requiring providers to ensure client asset accessibility and strong protection mechanisms.
- Client segregation: VASPs must clearly separate user assets from company assets, preventing misappropriation, an essential safeguard post‑FTX.
- Technical & insurance standards: Providers must implement comprehensive insurance coverage, conduct annual system audits, and deliver regular asset statements to clients .
📈 Exchange Requirements & Controls
- Real-time reporting: All digital asset exchanges are required to implement real-time transaction reporting, improving transparency and oversight.
- Rigorous operational controls: Exchanges must have robust systems and controls in place, covering cybersecurity, liquidity management, and resilience, to maintain market integrity.
- Investor protection mandates: Exchanges are subject to liquidity standards to guarantee withdrawals, and they must strictly prohibit market manipulation and insider trading .
🔄 Staking Disclosure Regime
- First in the world: DARE 2024 Bahamas crypto regulation framework introduces a global-first mandatory disclosure regime for staking services, covering staking protocols, lock-up periods, reward structures, and associated risks.
- Business-level transparency: Both client-owned digital assets and centrally run staking pools are included, with clear, standardized reporting required.
📌 Snapshot – What Providers Must Do
Area Requirement Summary Custody Segregate assets, ensure access, engrain insurance & audit compliance Exchanges Implement real-time reporting, adhere to operational & liquidity controls, prevent abuse Staking Disclose staking details, reward mechanics, risks, mandatory transparency
Stablecoin & Privacy Token Policy
With DARE Act 2024, the Bahamas introduces a clear and stringent framework for stablecoins and privacy-enhancing digital assets, addressing both financial stability and consumer protection.
💱 Comprehensive Stablecoin Framework
- Definition and registration: Stablecoin issuers must register with the SCB, classify their stablecoins, and declare required reserve assets.
- Reserve transparency: Ongoing obligations include transparent reporting, protected and segregated reserves, and redemption guarantees .
- Ban on algorithmic stablecoins: Reflecting global caution after incidents like TerraUSD, the Act explicitly prohibits algorithmic stablecoins.
- Operational controls: Custody, reserve audits, redemption protocols, and robust insurance must be in place, a first for Caribbean jurisdictions.
🛡️ Privacy Token Prohibition
- The Act outright bans the issuance of privacy-enhancing tokens, regardless of format.
- Note: While issuance is prohibited, private tokens may still be traded under DAB supervision, provided they meet custody, AML, and transparency standards.
- This aligns with the Bahamas’ commitment to counter illicit finance and adhere strictly to FATF and IOSCO guidelines.
📌 Snapshot – Key Stablecoin & Privacy Rules
Rule Details Registration Mandatory for all stablecoin issuers Reserve & audit Transparent, segregated reserves Algorithmic stablecoins Completely banned Privacy tokens Issuance prohibited; trading allowed under control
Sand Dollar CBDC & Bank Integration
The Bahamas’ Sand Dollar, launched in October 2020, stands as the world’s first national retail central bank digital currency (CBDC) and occupies a central place within the DARE Act Bahamas crypto regulation. Originally issued via licensed money-transmitters and payment firms, its uptake remained modest, representing under 1 % of the country’s currency in circulation by 2023.
🏦 Mandated Bank Integration within Two Years
To increase adoption, in mid‑2024 the Central Bank of The Bahamas announced upcoming regulations that will require all commercial banks to support Sand Dollar distribution and access for their clients within the next two years.
Governor John Rolle stated:
“We foresee a process where all of the commercial banks … will be required to provide their clients with access to the [CBDC].”
Reuters, 2024/07/01
🔧 Technical & Adoption Challenges
Integrating Sand Dollar into existing banking systems will demand significant IT infrastructure upgrades, raising complexity and cost for commercial banks.
Adoption hurdles include:
- Persistent slow wallet and merchant uptake, monthly top-ups declined from US $49.8 M to US $12 M over a year,
- Confusion from too many wallet providers, requiring unified access via banks,
- Limited telecom infrastructure on remote islands, though offline functionality is supported by design.
🌍 Strategic Implication for the Bahamas & Global CBDC Adoption
By leveraging regulated banks to distribute CBDC, the Bahamas aims to dramatically accelerate Sand Dollar usage and bootstrap mobile payments across its widely dispersed islands. This “stick approach” contrasts with earlier “carrot” incentives, shifting from promotion to enforcemen.
As a global pioneer, the Bahamas’ strategy is closely observed by central banks worldwide, from the ECB to China, seeking models for mass CBDC distribution frameworks.
📌 Key Takeaways
Element Benefit / Challenge Mandatory bank integration (within 2 years) Ensures broad market access, counters fragmentation IT systems overhaul needed Imposes cost and operational burden on banks Adoption barriers Wallet confusion, telecom issues, initial low use Global significance Bahrain’s model informs CBDC strategies worldwide
Comparing DARE 2020 vs DARE 2024
The Bahamas’ DARE Act 2020 (old Bahamas crypto regulation) was among the world’s first bespoke frameworks for digital asset businesses. However, as the industry evolved, spurred by events like the FTX collapse, the need for more comprehensive regulation became evident. On July 30, 2024, Parliament enacted DARE Act 2024, replacing the original and significantly enhancing its provisions.
🗺️ Scope & Market Coverage
- DARE 2020: Focused narrowly on exchanges and token issuance, providing initial regulatory coverage but leaving key areas unaddressed.
- DARE 2024: Expands to cover 17 distinct digital asset activities, including advisory, derivatives, staking, custody, and more, allowing future updates as the market evolves.
🛡️ Investor Protection & Controls
- 2020: Limited investor safeguards, with few systemic requirements.
- 2024: Introduces real-time reporting, system controls, conflict-of-interest rules, liquidity standards, and market conduct regulations, building a more secure and mature ecosystem.
🔐 Custody & Wallet Oversight
- 2020: Custody governed by FCSPA, separate from digital asset regulation.
- 2024: Brings custody and wallet services squarely under DARE’s remit, enforcing segregation, insurance, audits, client access assurances, and transparency.
🔄 Staking Transparency
- 2020: Staking oversight was minimal or undefined.
- 2024: Introduces a world-first staking disclosure framework, requiring providers to publish protocols, staking risks, lock-ups, and reward mechanisms.
💱 Stablecoins & Privacy Tokens
- 2020: Lacked specifics on stablecoins or privacy-preserving tokens.
- 2024: Defines and registers stablecoins, mandates reserve backing and audits, and prohibits algorithmic stablecoins. Similarly, privacy token issuance is banned, although supervised trading remains permitted.
🚫 Mining Restrictions
- 2020: No vaping regulations toward mining.
- 2024: Restricts proof-of-work mining, allowing only ancillary or non-commercial activity within registered entities.
📌 Comparison Snapshot
| Element | DARE 2020 | DARE 2024 |
|---|---|---|
| Scope | Exchanges & token issuance | 17 asset activities incl. staking, derivatives |
| Custody | Separate regime under FCSPA | Part of DARE; client asset segregation & audits |
| Investor Protection | Basic | Real-time reporting, liquidity & conduct rules |
| Staking | Largely undefined | Mandatory disclosure of protocols & risks |
| Stablecoins | Unregulated | Reserve-backed stablecoins; no algos allowed |
| Privacy Tokens | No rule | Issuance banned; trading under supervision allowed |
| Mining (PoW) | Unaddressed | Restricted to non-commercial or ancillary use |
🌍 Why It Matters
- DARE 2024 (Bahamas crypto regulation) positions the Bahamas as a global regulatory leader, aligning with IOSCO, FATF standards and closing the gaps exposed by FTX.
- The enhanced protections, from custody to staking, provide VASPs and investors with clear, trustworthy rules for offshore operations.
- The Bahamas now offers a progressive, future-proofed crypto jurisdiction, balancing innovation with significant safeguards.
Opportunities & Challenges
The DARE Act 2024 creates fertile ground for growth—but also poses significant hurdles for both local and international crypto participants targeting the Bahamas.
🌟 Opportunities
- Becoming a Global Crypto Hub
The Bahamas aims to solidify its position as a world-class digital asset jurisdiction. With comprehensive licensing, investor safeguards, and staking oversight, the country now offers a compelling regulatory alternative to the EU’s MiCA and other frameworks. - Economic Development & Job Creation
According to government sources, DARE enables the digital asset ecosystem to create jobs and diversify the economy, a welcome shift for an island nation traditionally weighted toward tourism and offshore banking . - Clarity & Compliance Advantage
VASPs benefit from transparent rules around licensing, custody, staking, AML/CFT, and market conduct, making it easier to expand with confidence.
⚠️ Challenges
- Technical & Infrastructure Limitations
The region’s infrastructure gaps, in telecom, payment systems, and digital onboarding, may slow actual implementation, even as regulation advances. - Market Trust Post-FTX
Despite regulatory progress, public skepticism remains high. Many Bahamians recall the FTX fallout, resulting in heightened wariness toward new crypto initiatives. - Implementation & Enforcement
For smaller providers, meeting DARE’s requirements, such as real-time reporting, capital, and insurance, may be operationally and financially daunting.
📝 Opportunities & Challenges – Summary Table
| Opportunities | Challenges |
|---|---|
| Position as crypto hub & diversify economy | Infrastructure & digital-readiness gap |
| Clear licensing & compliance path | Public distrust after FTX collapse |
| Job creation and economic growth | High compliance & technical costs |
✅ Strategic Considerations
- VASPs: The Bahamas offers structured guidance and clear licensing—balanced against operational costs and infrastructure readiness.
- Investors: Transparency and disclosure requirements enhance trust—but investor sentiment may still be influenced by past controversies.
- Local Authorities: Supportive regulation must be matched by investment in technical infrastructure and public education to restore confidence.
Conclusion
The DARE Act 2024 firmly places the Bahamas at the forefront of global crypto regulation, balancing innovation and investor protection. As Christina Rolle, Executive Director of the Securities Commission, aptly observed:
“We have created a framework that not only focuses on investor protection, but also encourages responsible innovation, positioning The Bahamas at the forefront of digital asset regulation globally.”
This evolution, moving from foundational licensing in 2020 to a comprehensive regulatory ecosystem in 2024, now supports 17 types of digital-asset activities, including custody, staking, stablecoins, and CBDCs.
🔍 Key Insights at a Glance
- Global regulatory leadership: DARE 2024, the new Bahamas crypto regulation framework, aligns with IOSCO, FATF, and international best practices, making the Bahamas an attractive jurisdiction for crypto business.
- Investor-centric framework: Mandates such as real-time reporting, custody safeguards, staking disclosures, and stablecoin audits build durable trust.
- Holistic innovation support: Forward-looking policy on PBAs, stablecoin oversight, and mandatory CBDC-banking integration creates a balanced yet dynamic environment.
🚀 Ready to Act?
If you’re an investor or corporate operator evaluating crypto-friendly jurisdictions, timing—and specialist guidance—are crucial.
CryptoExpatriation.com offers a fully personalized solution connecting you with top-tier crypto tax lawyers to design your ideal crypto expatriation plan. We tailor strategies to your specific needs, ensuring you navigate your move with clarity, confidence, and complete legal security.
Pay 0% Tax Legally — Start Your Tax-Free Strategy Today
Even in low-tax jurisdictions, most investors still overpay.
Our elite partner tax law firms specialize in advanced legal structures that can reduce your effective tax rate to as low as 0%, fully compliant, audit-ready, and tailored to your profile.
Crypto-friendly. International. Proven.
Get ahead of the curve: Book a free consultation today to assess your path to Bahamas residency and crypto business setup, secure your foothold in this future-forward jurisdiction.
✅ Why Act Now?
- Be among the first to benefit from DARE’s comprehensive crypto sandbox
- Strengthen compliance from day one, avoiding common regulatory pitfalls
- Unlock new opportunities in banking, licensing grants, and global credibility
