There have been minimal changes in the fintech market in The Bahamas over the past 12 months.

The Digital Assets and Registered Exchanges Act of The Bahamas, the primary legislation governing digital asset businesses and registered exchanges, the Digital Assets and Registered Exchanges Act, 2020 (the “DARE Act 2020”) was repealed and replaced by the Digital Assets and Registered Exchanges Act, 2024 (the “DARE Act 2024”), subject to transitional rules (eg, 90 days for existing registrants to apply for registration and the carry. The DARE Act 2024 introduced significant changes to the regulatory framework governing digital asset businesses and registered exchanges operating in or from within The Bahamas (DABs), including the following.

• It enumerates a wider set of activities now requiring registration, including:
1. operating a digital asset exchange;
2. exchanging digital assets (for fiat and other digital assets);
3. payment services;
4. executing orders;
5. issuing stablecoins;
6. placing digital assets;
7. reception and transmission of orders;
8. transfer services;
9. custody;
10. advice;
11. management;
12. DLT node services;
13. anonymity enhancing services;
14. digital asset derivative services; and
15. staking services.
• It reframes and strengthens the token offering regime:
1. it introduces a dedicated stablecoin regime, banning algorithmic mechanisms that adjust supply to maintain value, mandating full reserve backing, segregation of reserves, quarterly proof of reserves, redemption policies providing 1:1 redemption (net ordinary disclosed fees); and empowering the Securities Commission of The Bahamas (the “Securities Commission”) to halt/delist stablecoins;
2. it requires an offering memorandum signed by founders/board and imposes a legal opinion on token classification;
3. it retains purchaser rights, including rescission/damages and a 72-hour withdrawal right with two-day refunds; and
4. it expressly prohibits the offering of privacy tokens in or from The Bahamas and clarifies obligations for services involving them.
• It introduces stronger, more granular requirements for registered exchanges, including the requirements to:
1. maintain assets in The Bahamas equal to at least twelve months of operating expenses;
2. maintain off chain transaction records; and
3. make near real-time price/volume/time data available to clients.
• It introduces client asset safeguarding, segregation, written custody agreements, and periodic statements, plus record-keeping to identify individual client holdings even under omnibus arrangements where digital assets are custodied.
• It requires suitability assessments, periodic reviews (at least every two years), warnings, and ongoing client reporting duties for digital asset advisory and management business.
• It regulates staking services, including requiring disclosures on protocol/consensus, lock up periods, rewards/penalties, client warnings (eg, loss/theft risk, tax liability, insurance coverage), and alignment with custody requirements, if custody is involved.
• It prohibits carrying on mining as a business except where ancillary to a registered DABs or as proprietary mining.
• It expands the anti-money laundering/countering the financing of terrorism (AML/CFT) framework, including requiring annual follow-up risk assessments, maintaining AML programmes and formal appointment of a compliance officer and a money laundering reporting officer, with duties and outsourcing limits clarified.
• It substantially strengthens enforcement, market integrity, and sanctions by introducing compliance orders, penalties up to BSD100,000 per contravention for failure to comply with orders or directives, elaborating administrative sanctions (public reprimands, bans, conditions, disgorgement, etc) and adding market integrity offences.

The industry anticipates that the Securities Commission will issue regulations and guidelines under the DARE Act 2024 that will further regulate the conduct of DABs. As of the date of publication, it is unclear whether these regulations and guidelines will address the use of AI in Bahamas-based DABs.

In addition to the anticipated regulations and guidelines, the industry anticipates the enactment of legislation governing the establishment and operation of digital autonomous organisations (DAOs) in or from within The Bahamas. As of the date of publication, it is understood that the DAO legislation will be introduced by the end of Q2 of 2026.

There are also discussions around the possibility of The Bahamas playing host to all-digital banks. This will be a development to look for over the next 12–36 months, as the Central Bank of The Bahamas (the “Central Bank”), the regulator in The Bahamas of banking business and payment services providers, has put itself to the forefront of fintech, being one of the first central banks in the world to introduce a central bank digital currency, known as the Sand Dollar. This will also align with the Central Bank’s focus on financial inclusion.

Fintech business models that are recognised and regulated in The Bahamas include the following.

• Digital asset exchanges and marketplaces: these are Bahamas-based or Bahamas-facing platforms that list, match and execute trades in digital assets under a dedicated licensing regime. Operators must meet activity-specific standards for systems, business continuity, market transparency and ongoing financial resources, including maintaining assets in The Bahamas to cover operating costs for a defined period under the DARE Act 2024.
• Custody and safekeeping of digital assets: standalone custodians and exchanges offering custody are subject to additional safeguards, including segregation of assets (proprietary and client), record-keeping and operational resilience as prescribed for custodial businesses under the DARE Act 2024.
• Advisory, portfolio management and investment funds: licensed advisers and discretionary managers develop strategies across tokens and other digital assets, including strategies for alternative investment funds. Bahamas funds, which are regulated under the Investment Funds Act, 2019 (the “IFA 2019”), such as SMART Funds, are commonly used to gain digital asset exposure; where activities amount to advising or managing digital assets (or related derivatives), they are regulated under the DARE Act 2024.
• Staking and yield services: third-party staking and pool operations are regulated activities. Registrants must make clear, plain English disclosures of protocol mechanics, lockups, redemption pathways, rewards and penalties, and provide risk warnings to clients before onboarding and upon request.
• Stablecoin issuers: The Bahamas has a dedicated framework for stablecoins: full backing by reserve assets, segregation and reconciliation of reserves, independent proof of reserves reporting, clear redemption rights, and authority to halt or delist where warranted. Algorithmic stabilisation mechanisms are not permitted.
• Token launches and distribution: public offers are governed by an offering regime that addresses classification, disclosure, approval, advertising and continuing obligations. Issuers must publish an offering memorandum and keep it current; certain limited offers and distributions benefit from tailored exemptions while remaining subject to notice filings and anti-misstatement rules.
• Payment service providers using digital assets: operating as a payment service provider business involving digital assets is expressly captured as a regulated activity under the DARE Act 2024, with registration and conduct obligations calibrated to the risks of value transfer and settlement using crypto rails.
• Payment systems and remittances (legacy and new players): the Payment Systems Act, 2012 (PSA) gives the Central Bank oversight of payment systems and instruments, including approval of domestic systems, designation powers, and a national payments policy that promotes safety, efficiency, competition, user protection and the development of new payment technologies. This framework supports both established institutions and fintech entrants in modernising domestic and cross-border payments and remittances.
• Web3 infrastructure and enterprise blockchain: builders of wallets, protocols and enterprise blockchain solutions play an important role in the ecosystem. The DARE Act 2024 clarifies that software development alone does not constitute a digital asset business, though operating exchanges, custody, staking pools or other regulated services does require registration.
• Compliance, regtech and digital identity: compliance providers support registrants with AML/CFT, data protection and governance obligations. The DARE Act 2024 requires professional conduct, record-keeping and prevention of unauthorised data access, and designated compliance and money laundering reporting officer roles; the Securities Commission oversees market conduct and has broad supervisory powers.
• Market integrity and enforcement: the regime includes purchaser protections in offerings and a comprehensive enforcement toolkit: investigation powers, administrative sanctions, and offences addressing misrepresentation, inside information, insider dealing, unlawful disclosure and market manipulation.
• Activities restricted or out of scope: the DARE Act 2024 prohibits unregistered digital asset business and restricts mining to proprietary activity or where ancillary to a registered business; the DARE Act 2024 also bans the sale of privacy tokens in or from The Bahamas. At the same time, it carves out certain items – such as game-specific tokens, some NFTs by function, e-money-like instruments and digital currency – from its scope so they can be addressed under the appropriate supervisory regimes.

The Securities Commission is the primary regulator of lines of fintech business, which is regulated under the DARE Act 2024, and the Investment Funds Act, 2019 (the “IFA 2019”).

• Pursuant to the DARE Act 2024, the Securities Commission regulates the activities of digital asset businesses; registers and supervises digital asset businesses; regulates token offerings; monitors solvency; protects clients; addresses conflicts; issues rules/guidance; and exercises broad investigative and enforcement powers including sanctions and offences (misrepresentation, insider dealing, manipulation).
• Under the IFA 2019, the Securities Commission regulates investment funds (including SMART Funds), fund managers and administrators; licenses funds and approves offering documents; and wields expanded powers to protect investors and the jurisdiction’s reputation, aligning with international standards and best practices.

The Central Bank approves and oversees domestic payment systems and payment instruments and electronic money service providers under the PSA; issuing standards/guidelines; conducting controls/audits and imposing sanctions where necessary. It also oversees the Sand Dollar, The Bahamas’ digital currency, under the Central Bank of The Bahamas Act, 2020.

The Compliance Securities Commission ensures compliance under the Financial Transactions Reporting Act, 2018 (FTRA) and is responsible for AML/CFT supervision of “financial institutions” within FTRA that are not otherwise regulated by the Central Bank, the Securities Commission, the Insurance Commission of The Bahamas or the Gaming Board of The Bahamas.

There are no restrictions or prescriptions on the fees that are charged by industry participants pursuant to the relevant legislation, ie, the DARE Act for DABs and the PSA for electronic money service providers. The DARE Act 2024 does, however, require that digital asset businesses have a schedule of fees and that fees are properly disclosed to their customers.

The regulation of the legacy players does not differ significantly from that of the fintech industry. The Central Bank and Securities Commission regulate both legacy players and fintech industry participants. The regulatory frameworks and approach to enforcement are very similar. Prudential restrictions, filing and reporting obligations and enforcement mechanisms differ by a matter of degree rather than in kind.

The Securities Commission established a fintech hub in The Bahamas through the launch of its Financial Innovation and Technology Link (SCB FinTLink) in October 2019. SCB FinTLink allows for the Securities Commission to engage with the public and industry to address various fintech issues and assist industry providers in navigating the regulatory regime. Through SCB FinTLink, and generally under the DARE Act 2024, the Securities Commission has taken a “sandbox lite” approach to the onboarding of new DABs. This approach focuses on the fitness and propriety of principals and compliance with internal controls of good governance and AML/CFT/counter-proliferation financing (CPF) requirements, while setting regulatory conditions, ie, regulatory capital and insurance requirements, by reference to and in proportion with the type of proposed business activities.

Each regulator’s jurisdiction is delineated based on their core purpose, namely:

• the Central Bank largely oversees the regulation of banking and trust matters, as well as payment service providers, including money transmission businesses and electronic money service providers
• the Insurance Commission oversees regulation of the insurance industry as a whole;
• the Securities Commission largely regulates the remaining financial service section, inclusive of capital markets business, (non-bank) financial and corporate services, digital assets, carbon credit trading and investment funds; and
• the Compliance Securities Commission is responsible for matters AML, CFT and CPL matters in respect of businesses not otherwise regulated.

As such, the remit of each regulator’s reach is limited to persons operating within their regulatory environment, either unregulated or pursuant to a licence. Where a person is licensed by two regulators, one typically acts as primary regulator and the other as secondary regulator, depending on that person’s core business.

Additionally, the Central Bank, the Insurance Commission and the Securities Commission have each been delegated authority to administer the implementation of the automatic exchange of financial account information under CRS and FATCA in respect of Reporting Financial Institutions they regulate. Furthermore, the Central Bank, the Insurance Commission and the Securities Commission each have responsibility of enforcing compliance with AML/CFT/CPF obligations by the entities they regulate. As such, the above-mentioned regulators tend to co-ordinate efforts in administering and enforcing compliance with AML/CFT/CPF and automatic exchange of financial account information obligations.

Regulators in The Bahamas do not issue no-action letters per se. However, they may, from time-to-time, issue a no-objection letter, indicating that they have no objection to a person carrying on a particular activity in or from within The Bahamas where circumstances have been presented to them that support a conclusion that a person does not require a licence under the relevant legislation to conduct such business.

The outsourcing of regulated functions typically requires at least a prior notification to the relevant regulator prior to entering into an outsourcing arrangement. Regulators have also issued guidance on provisions that material outsourcing agreements must contain. These include:

• scope of the arrangement and services to be provided;
• service levels and performance requirements;
• audit and monitoring procedures;
• business continuity arrangements;
• default arrangements and termination provisions;
• pricing and fee structure;
• dispute resolution arrangements;
• sub-contracting;
• insurance;
• liability and indemnity; and
• confidentiality, privacy and security of information.

The Central Bank also requires an annual summary of a regulated entity’s outsourcing arrangements.

Fintech providers are generally not regarded as gatekeepers with responsibility for activities performed on their platform; however, providers are required to ensure, with respect to their own activities, compliance with AML/CFT/CPF, and risk management rules and regulations.

Both the Central Bank and the Securities Commission are empowered to commence proceeding to enforce compliance and punish breaches of applicable laws and regulations by its regulated entities. Some of these actions include:

• issuance of compliance directives;
• conducting investigations;
• conducting hearings;
• imposition of sanctions;
• commencing court applications to wind up, dissolve, liquidate or terminate the activities;
• commencing court applications for the appointment of a liquidator or receiver; and
• imposition of fees and fines. 

Of note, the Securities Commission exercised its rights of enforcement under the DARE Act 2018 to appoint a liquidator of FTX Digital Markets Ltd (FTX DM). The FTX DM was registered under the DARE Act 2018 to provide a platform for the exchange of digital assets and traditional “fiat” currency. Following FTX Trading Ltd (and over 100 affiliated entities) filing for Chapter 11 bankruptcy in the United States of America, the Securities Commission froze the assets of FTX DM to secure the assets of FTX customers. Thereafter, the Securities Commission appointed a liquidator before the Supreme Court of The Bahamas and FTX DM was placed into liquidation. The liquidation process is still ongoing.

Fintech industry participants are subject to certain non-financial services regulations, including the following.

• Data Protection (Privacy of Personal Information) Act, 2003 (DPA): the industry participants that collect personal data and information in The Bahamas are subject to the DPA. The DPA requires persons that collect and process personal data do so in a manner that protects the confidentiality of such information and the privacy of those individuals. 
• As will be discussed further in 2.14 Impact of AML and Sanctions Rules, industry participants are required to strictly follow the AML, CFT and CPF rules and regulations.

The focus and the enforcement of these rules and regulations do not differ from those of legacy players.

Auditors also review the activities of industry participants. Digit asset businesses are required to file their annual audit financial statements with the Securities Commission. Electronic money service providers must be audited and shall make their audit reports readily available upon request from the Central Bank. 

It is not uncommon for regulated entities to offer unregulated products and services in conjunction with regulated products and services. Whether they do so through the same legal entity typically depends on the product and service. Typically, where regulated and unregulated services and products are offered through the same legal entity, it is prudent to obtain a letter of no objections from the regulator, permitting the regulated entity to offer the unregulated products and services.

The FTRA and its accompanying regulations impose obligations on Financial Institutions (FIs) and Designated Non-Financial Business and Professions (DNFBPs) to obtain key information on their customers for the purpose of complying with AML, CFT and CPF laws and regulations. Therefore, a fintech industry participant that qualifies as an FI or DNFBP must comply with the information-gathering and internal control obligations imposed by the FTRA, as applicable.

Furthermore, AML, CFT and CPF compliance is built into the legislation governing the fintech industry. Consequently, regardless of whether a regulated fintech industry participant qualifies as an FI or a DNFBP under the FTRA, it is required to comply with AML, CFT and CPF laws and regulations.

Failure to comply with such rules may lead to sanctions, fines, loss of reputation and loss of licences. Therefore, captured industry participations must ensure that they maintain adequate risk rating and risk mitigation policies and procedures. Furthermore, client due diligence is required to ensure that they are not assisting with criminal conduct. In recent years, the Royal Bahamas Police Force has implemented a task force specifically geared towards investigating and prosecuting financial crimes including money laundering and terrorist financing.

AML/CTF/CPF rules are applied in accordance with the FATF Recommendations. The Bahamas is deemed compliant or largely compliant with all 40 Recommendations and was the first jurisdiction to be fully compliant with FATF Recommendation 15 by applying AML/CTF/CPF rules to virtual assets and virtual assets services providers.

The DARE Act 2024 does not allow for the reverse solicitation of services related to digital assets from another jurisdiction by the general public. The provision of services related to digital assets to persons resident in The Bahamas from anywhere in the world constitutes carrying on a digital assets business in The Bahamas, for which a licence is required under the DARE Act 2024. This restriction/licence requirement is lifted where the recipient of digital asset services is an accredited investor.

There are no express provisions in applicable legislation related to the reverse solicitation of other fintech products.

Bahamian laws and regulations do not expressly regulate robo-advisers. However, where a person seeks to offer these services, it is prudent to obtain a letter of no objections from the applicable regulator.

It is currently difficult to analyse the steps which are being taken by legacy players with respect to robo-advisers due to the lack of information in the Bahamian market.

The relevant legislation and regulations do not currently address this aspect of fintech and, therefore, best execution requirements are not applicable. 

Lending in The Bahamas is largely done by traditional means through banks and lending institutions. The banks and lending institutions have made great strides, including allowing applications to initiate an application online and through mobile apps to streamline their lending procedures, thereby reducing wait times and in-person interactions; however, online lending in the traditional sense is not used or specifically regulated in The Bahamas.

Regulations in The Bahamas currently do not stipulate the underwriting process for fiat lenders.

In The Bahamas, the primary lenders are the retail banks; therefore, the traditional source of fiat currency funds for loan in The Bahamas are deposits. Lending is also done on a smaller scale by non-bank money lenders and on a P2P basis. In these cases, fiat currency loaned is typically lender-raised capital. Money lending in or from The Bahamas is typically a regulated activity. Banks, which lend from the deposits they receive, are regulated by the Central Bank; whereas non-bank money lenders are regulated by the Securities Commission. Consequently, lenders are required to comply with prudential regulations in order to protect borrowers and ensure the smooth operation of the financial system in The Bahamas.

There is currently no substantial market for loan syndication in The Bahamas. None of the relevant legislation addresses this activity.

Payment processors and payment rails are regulated by the Central Bank, which ensures that the systems used are safe and effective for consumers. Therefore, domestic payment processors must use the rails that are approved by the Central Bank of The Bahamas.

The Central Bank is committed to ensuring that The Bahamas remains up to date and competitive in the payment processing arena. The Sand Dollar, a digital currency backed by the Central Bank, was recently implemented to allow for the safe and effective digital transmission of Bahamian dollars. 

Cross-border payments and remittances are regulated by the Central Bank of The Bahamas. Individuals or entities  resident in The Bahamas are required to obtain Exchange Control approval from the Central Bank prior to the transfer of funds outside of The Bahamas or in a foreign currency. The approval thresholds vary depending on the nature of the transaction.

The transferee is under an obligation to ensure it provides accurate information with respect to the transaction and complies with prevailing AML standards.

The regulation of marketplaces and trading platforms for digital assets is governed by the DARE Act 2024. By and large, the DARE Act 2024 does not make a distinction between marketplaces and trading platforms for the purposes of regulation or even types of marketplaces and trading platforms. Marketplaces and trading platforms are generally categorised as either “digital asset exchanges” or “digital asset derivative exchanges” under the DARE Act 2024.  A “digital assets exchange” is defined in the DARE Act 2024 as “a system or platform which facilitates the sale, trading or exchange of digital assets for fiat currency or digital assets”, while a “digital asset derivative exchange” is defined as “a system or platform which facilitates the issuance, distribution, sale, trading or exchange of digital asset derivatives”. The types of marketplaces or platforms that would be recognised under these broad definitions include decentralised, centralised, hybrid decentralised/centralised and peer-to-peer (P2P) exchanges. Where promoters of a marketplace or exchange seek to launch the marketplace or exchange from The Bahamas, they are required to apply to the Securities Commission to be registered to conduct digital asset business. 

It should be noted that where a digital assets exchange provides custody of the assets traded on its platform, it is required to comply with the provisions of the DARE Act 2024 that generally apply to custodians of digital assets.

The DARE Act 2024 generally applies to digital assets. A digital asset is defined in the DARE Act 2024 as “a digital representation of value or a right which may be transferred and stored electronically, using distributed ledger technology or similar technology”. However, by virtue of Section 3(b) of the DARE Act 2024, the following types of assets are expressly excluded from regulation under the DARE Act 2024:

• a security token, which is a digital asset and, when issued or traded, has one or more of the characteristics of a “security” as defined in the Securities Industry Act (SIA); instead, the issuance of security tokens is regulated under the Bahamian securities law pursuant to the provisions of the SIA;
• a digital representation of value issued by or on behalf of the publisher and used within an online game, game platform, or family of games sold by the same publisher or offered on the same game platform (ie, a gaming token), which is not subject to regulation under Bahamian law;
• a non-fungible token which, by its nature and function rather than the designation given by its issuer, is not used for payment or investment purposes, and is not a digital representation of any other financial asset, which is not subject to regulation under Bahamian law;
• electronic representations of a fiat currency, security or any other financial assets (eg, electronic credit or debit cards), which are regulated under the provisions of the Central Bank of The Bahamas Act and the PSA;
• a digital asset which, when issued or traded, has one or more of the same characteristics as electronic money – electronic money may only be issued in The Bahamas by the Central Bank; and
• a digital currency; as legal tender for use in The Bahamas may only be issued by the Central Bank.

The emergence of cryptocurrency exchanges or digital assets exchanges, as they are called under Bahamian law, were part of the impetus driving the enactment of the DARE Act 2024. The Bahamas has taken a sandbox approach to regulating the digital asset industry, allowing innovation to take place within a strong regulatory framework that promotes safeguarding of customer interests.

Although the DARE Act 2024, pursuant to Section 23(b), requires digital asset exchanges to maintain appropriate rules for admission to list digital assets on the exchange, it does not prescribe the standards to be adhered to by digital asset exchanges when determining whether or not to list digital assets. At present, listing standards are by and large dictated by the industry, which aligns with the sandbox approach adopted for regulating the digital asset industry in The Bahamas. That said, as a basic rule, digital asset exchanges are not permitted to list security tokens unless they are separately registered as a marketplace under the provisions of the SIA. It is possible that the Securities Commission may, in the future, issue regulations, rules or guidance which prescribe listing standards.

By virtue of Section 22(b) of the DARE Act 2024, digital asset exchanges are required to maintain operating rules to ensure that transactions executed on the digital asset exchange are settled in a timely fashion. As part of its application for registration, a digital asset exchange is required to submit its rules for clearing and settlement to the Securities Commission.

The rise of P2P trading platforms has expanded the ways in which digital assets may be bought and sold, reducing reliance on traditional intermediaries such as exchanges, broker-dealers, and financial institutions. This has increased competition for both traditional financial firms and fintech providers, as users can transact directly through distributed ledger technology without using centralised trading platforms. However, the DARE Act 2024 takes a functional approach, requiring registration whenever a person operates or facilitates a marketplace, matching service, or platform for trading digital assets, that activity may constitute a digital asset business.

The regulation of trading platforms creates regulatory challenges because many P2P systems are decentralised and may not have a clearly identifiable operator that can be licensed or supervised. The DARE Act 2024 addresses this by applying to persons who organise, promote, operate, or facilitate the issuance, sale, transfer, or exchange of digital assets in or from within The Bahamas, even if the activity occurs online or across borders. As a result, DABs developing P2P platforms may still fall within the regulatory purview of the DARE Act 2024, particularly where they provide custody, matching, order execution, or other intermediary functions.

The growth of P2P trading also raises concerns about AML/CFT/CPF compliance, investor protection, market manipulation, and transparency, since trades may occur outside regulated exchanges. The DARE Act 2024 imposes obligations on registered digital asset businesses to maintain proper controls, monitoring systems, and disclosure standards, and gives the Securities Commission broad powers to supervise and take enforcement action where trading activity threatens market integrity or the public interest.

There are no express provisions in the DARE Act 2024 specifically relating to payment for order flow. A DAB, including an exchange or intermediary executing orders, must maintain proper systems and controls, act honestly and fairly, and ensure that it does not mislead clients or undermine market integrity. These obligations require DABs to disclose conflicts of interest and to maintain rules that promote fair and orderly trading, which would likely restrict undisclosed payment-for-order-flow arrangements.

In addition, exchanges must keep records of transactions, provide accurate pricing and trading information, and implement market surveillance tools designed to detect abusive or manipulative practices. If payment for order flow were to create incentives that distort execution quality, price discovery, or client outcomes, the Securities Commission could treat the practice as inconsistent with the DARE Act 2024’s requirements relating to investor protection, professional conduct, and market fairness.

The Securities Commission also has broad supervisory powers to impose conditions, require changes to business practices, or suspend activities that are conducted in a manner that is misleading or injurious to the public. Accordingly, while not expressly prohibited, payment for order flow would likely only be permissible in The Bahamas if fully disclosed, properly controlled, and consistent with duties imposed by the DARE Act 2024 relating to conflicts management, transparency, and fair market operation.

The DARE Act 2024 contains a number of provisions, the aim of which is ensuring market integrity and deterring market abuse. These provisions include:

• management of conflicts of interests (Section 31);
• a prohibition on insider dealing (Section 69);
• a prohibition on disclosure of insider information (Section 70);
• a prohibition on market manipulation (Section 71); and
• protection for whistle-blowers (Section 73).

Conflicts of Interests

Pursuant to Section 31, DARE Act 2024 registrants are required to take all reasonable steps to identity and avoid conflicts of interests and where they cannot be avoided, take all reasonable steps to manage, minimise and monitor conflicts of interests. In addition, registrants are required to disclose conflicts of interests to their clients where they cannot be avoided. Notably, registrants are also required to ensure that key duties and functions are appropriately segregated, particularly those duties and functions which, when performed by the same individual, may result in potential conflicts of interest which may expose the registrant or its clients to inappropriate risks.

Insider Dealing

By virtue of Section 69 of the DARE Act 2024, any person who engages in, or attempts to engage in insider dealing or recommends or induces another person to engage in insider dealing commits an offence and is liable: (i) on summary conviction (ie, conviction without trial) to a fine of up to BSD250,000, a term of five years imprisonment or both; or (ii) on conviction upon information to a fine of up to BSD500,000, a term of ten years imprisonment or both.

Disclosure of Insider Information

Section 70 of the DARE Act 2024 makes it an offence to disclose: (i) information of a precise nature, which has not been made public, relating, directly or indirectly, to an issuer or person seeking admission to trading, or to a digital asset, and which, if it were made public, would likely have a significant effect on the price of the digital asset or a related digital asset; or (ii) in respect of a person responsible for the execution of orders for digital assets on behalf of clients, information of a precise nature conveyed by a client and relating to the client’s pending orders in digital assets, relating, directly or indirectly, to an issuer or person seeking admission to trading or to a digital asset, and which, if it were made public, would likely have a significant effect on the price of the digital assets or a related digital asset. The penalties for such disclosure include disgorgement of gains or losses avoided.

Prohibition on Market Manipulation

Section 71 of the DARE Act 2024 prohibits any person from engaging in or attempting to engage in market manipulation in relation to digital assets. Market manipulation includes transactions, orders, or behaviours that give false or misleading signals about the supply, demand, or price of a digital asset or that artificially set its price at an abnormal level. It also includes using deceptive devices, spreading false or misleading information (including rumours through media or the internet), or engaging in activities intended to distort the market. Additionally, actions such as dominating the supply or demand of a digital asset, disrupting trading platforms, or publicly promoting an asset while secretly holding positions to profit from price movements may also constitute market manipulation.

Protection for Whistle-Blowers

Section 73 of the DARE Act 2024 protects whistle-blowers from legal, administrative, or employment-related sanctions when they disclose information about wrongdoing. This protection applies even if the disclosure breaches a legal or employment related obligation, provided the person acted in good faith and reasonably believed the information was substantially true. “Wrongdoing” includes offences under the Act, criminal offences, failure to fulfil legal obligations, consumer protection issues, and breaches of privacy or personal data. The provisions of Section 73 aim to ensure that individuals are not penalised for exposing such wrongdoing.

The DARE Act 2024 specifically prohibits the issuance of algorithmic stablecoins. There are no other regulations expressly related to High-Frequency and Algorithmic Trading (HFAT).

The Bahamas has not implemented regulations requiring persons conducting HFAT to be licensed or registered as market makers.

Due to the absence of express regulation, a distinction between the two business models (funds and dealers) will be difficult to determine. 

The relevant laws and regulations do not currently address this activity. In the absence of express provisions, it is prudent to obtain a letter of no objections from the regulator for the provision of such services.

The Insurance Commission of The Bahamas is responsible for the regulation of insurance and insurance agencies in The Bahamas. Regulations with respect to insurtech have not been implemented, however, due to the growing market and rapid changes, the Insurance Commission has launched a training programme aimed at educating and equipping industry professional with the tools in the market as the insurtech industry grows. 

Industry participants are regulated by the Insurance Commission and must be registered and hold a valid licence to operate as an insurance agency in The Bahamas. The Insurance Act, 2005 (IA) provides for the registration of insurers seeking to conduct the following classes of insurance business:

• general insurance business, ie, accident insurance, liability insurance business, marine, aviation and transport insurance business, motor vehicle insurance business, pecuniary insurance business and property insurance business;
• long-term insurance business, ie, industrial life insurance business, ordinary life insurance business, variable life insurance business, sickness or health insurance business (including group health), pension fund management, annuities and variable annuities business; and
• all other classes of insurance not falling under general insurance business or long-term insurance business, including but not limited to medical service plans, hospital service plans, health maintenance organisations, prepaid limited health care service plans, dental, optometry and other similar health service plans.

The IA does not permit an insurer to be registered to conduct long-term insurance business and general insurance business at the same time.

Persons who provide regtech to digital asset businesses are not subject to regulation under the DARE Act 2024. 

In light of the response at  9.1 Regulation of Regtech Providers, the authors are not aware of any such terms.

A number of financial institutions in The Bahamas, which previously operated in the traditional finance space, have expanded the scope of their operations to include digital asset business. This includes the incorporation of digital asset exchange divisions within existing business models, as well as expanding operations to provide custody of digital assets.

The promulgation of blockchain directly led to the enactment of the DARE Act 2024. Blockchain is expected to play an integral part of the digital autonomous organisation (DAO) regime that The Bahamas is looking to enact. The Commission is continuing to develop legislation in this space and has plans to amend the DARE Act 2024 and issue supplementary material in the form of regulations, rules or guidance notes in the near future.

Not all blockchain assets are considered regulated financial instruments under the DARE Act 2024. The DARE Act 2024 broadly regulates digital assets, but their regulatory treatment depends on their classification and economic characteristics. One key issue in classification is determining whether a token functions primarily as a utility token, payment token, asset token, or stablecoin, or whether it has characteristics of a traditional security. If a digital asset qualifies as a security token (ie, it has characteristics of a security), it is regulated under the Securities Industry Act, rather than the DARE Act.

Under the DARE Act 2024, recognised categories of assets include general digital assets issued through token offerings, stablecoins, and digital asset derivatives, each subject to specific regulatory requirements. Token issuers must comply with disclosure obligations, including publishing an offering memorandum describing the project, risks, and characteristics of the digital asset. Stablecoins are subject to stricter rules, including reserve asset requirements, segregation of reserves, audits, and redemption rights. In this way, the regulatory framework focuses not only on the existence of a blockchain asset, but on its function, the rights attached to it, and its economic purpose, which collectively determine the applicable regulatory regime.

Under the DARE Act 2024, issuers of digital assets are subject to regulation when conducting a token offering in or from within The Bahamas. An issuer intending to conduct an initial sale of digital assets must be fit and proper and must generally prepare and publish an offering memorandum containing full and accurate disclosure to enable potential purchasers to make an informed investment decision. The offering memorandum must describe key details about the project, the digital asset, associated risks, and the structure of the offering, and must be filed with the Securities Commission as part of the registration process for the token offering.

The issuer must also obtain a legal opinion on the classification of the token and apply to register the token offering with the Securities Commission at least 45 days before the start of the offer period. The Securities Commission has supervisory powers over token offerings, including the ability to require amendments to disclosures, suspend an offering, or require the removal of misleading advertising.

A key challenge to the tokenisation of real-world assets is the classification issue: if a token represents ownership or investment rights similar to traditional securities, it may be deemed a security token and therefore regulated under the SIA rather than the DARE Act 2024. This creates regulatory complexity for projects seeking to tokenise assets such as real estate or financial instruments, as they may fall within multiple regulatory regimes and require compliance with securities laws in addition to digital asset regulations.

The DARE Act regulates digital asset exchanges, which must be registered with and supervised by the Commission. Operators of exchanges must satisfy fit and proper requirements, maintain adequate governance structures, risk management systems, internal controls, and comply with AML/CFT obligations. The DARE Act also requires exchanges to implement rules for fair and orderly trading, including systems to monitor trading activity and prevent market manipulation, fraud, and abusive practices (see 6.8 Market Integrity Principles).

Secondary market trading of digital assets may occur on registered exchanges or through other regulated digital asset service providers, such as broker-dealers or intermediaries that facilitate trades between buyers and sellers. These intermediaries must also be registered and comply with the operational, disclosure, and conduct standards established under the Act. While P2P transfers of digital assets between individuals may occur on the blockchain, activities that facilitate or operate a marketplace or matching service for such trades generally fall within the scope of regulated digital asset business and require registration. In this way, the DARE Act seeks to ensure that organised trading environments and intermediated secondary markets operate under a framework designed to protect investors and maintain market integrity.

Under the DARE Act 2024, staking services are treated as a regulated digital asset business activity and may only be carried out by entities registered with the Securities Commission. Applicants seeking to provide staking services must submit detailed information to the Securities Commission, including the staking protocol, consensus mechanism, lock-up periods, reward structure, redemption process, and any potential penalties for participants. Registered providers must disclose this information to clients before onboarding and warn them of risks such as possible loss of value, hacking, lack of insurance protection, and potential tax liabilities. Where staking services involve custody of clients’ digital assets, the provider must also comply with the DARE Act’s additional regulatory requirements for digital asset custodians.

The provision of lending services relating to digital assets is regulated under the DARE Act 2024 when it forms part of a digital asset business activity. Any entity offering services such as lending, borrowing, or otherwise facilitating the use of digital assets must apply to be registered with the Securities Commission as a digital asset business and comply with the DARE Act’s licensing, governance, and operational requirements. These providers must maintain adequate risk management systems, internal controls, and disclosures to ensure that clients understand the nature and risks of the services offered.

In addition, services such as staking, which involve locking digital assets in a blockchain protocol to support network validation in exchange for rewards, are specifically regulated as a form of digital asset service. Providers offering staking services must disclose key information to clients, including the staking protocol used, reward structure, lock-up periods, penalties, and risks such as loss of value or hacking. Where the provider holds or controls clients’ digital assets as part of the lending or staking arrangement, the provider must also comply with the DARE Act’s custody requirements, including safeguards for the protection and segregation of client assets. Overall, the DARE Act 2024 regulates these services by requiring registration, disclosure, and prudential safeguards to protect users and maintain market integrity.

The offering of cryptocurrency derivatives (or rather digital asset derivatives) is regulated under the DARE Act 2024. Digital asset derivatives (such as options, futures, swaps, and contracts for difference) are recognised as instruments whose value is derived from an underlying digital asset. Any entity providing digital asset derivative services, including operating a derivative exchange, creating or selling derivative contracts, or providing clearing and settlement services, must be registered as a digital asset business with the Securities Commission. These providers are subject to the DARE Act 2024’s regulatory framework, including licensing, fit-and-proper requirements for operators, and compliance with governance, risk management, and operational standards. They must also maintain adequate capital, internal controls, and policies such as AML/CFT/CPF procedures as part of the registration process. The Securities Commission supervises these activities and may enforce compliance or revoke registration where the provider breaches the DARE Act 2024 or fails to meet regulatory standards.

To the extent that a DeFi product can be classified as a security token under the provisions of the SIA, it is regulated under the SIA and not under the DARE Act 2024. The SIA does not exempt security tokens from regulation on the basis that it does not involve intermediaries.

Funds that invest in blockchain assets are regulated as investment funds pursuant to the Investment Funds Act. The Investment Funds Act does not distinguish between asset classes for the purposes of regulation.

The issuance of virtual currencies falls within the purview of the Central Bank, which is the sole authority for issuing virtual currencies under the Central Bank of The Bahamas Act.

As of the date of publication, NFTs and NFT platforms are not subject to regulation in The Bahamas.

The issuance of stablecoins is regulated under the DARE Act 2024. The DARE Act requires that issuers of stablecoins must provide detailed disclosures in the offering memorandum, including the stabilisation mechanism, reserve asset composition, custody arrangements, and redemption policies. They must ensure that stablecoins are fully backed by reserve assets which are segregated from client assets, held in appropriate custody arrangements, readily liquid, and ringfenced from the issuer’s creditors. Issuers are also required to undergo regular independent audits and quarterly proof-of-reserve examinations, as well as maintaining clear redemption rights allowing holders to redeem the stablecoin 1:1 for the underlying asset. Additionally, the Securities Commission has the authority to restrict, halt, or delist a stablecoin, and issuers must verify a holder’s identity before processing redemption requests.

At present the concept of open banking is not subject to specific regulation in The Bahamas. However, depending on the activities involved, open banking may be regulated by the Banks and Trust Companies Regulation Act 2020 (BTCRA) and the PSA. To the extent that a facilitator of an open banking arrangement generally conducts banking business as defined in the BTCRA, it is required to hold a banking licence pursuant to the provisions of the BTCRA.   

The PSA regulates payments systems, which are defined therein as “a formal arrangement with common rules and standardized arrangements for the execution of transfer orders, between participants, including a clearing house, the settlement of payments relating to securities, or for the processing, clearing or settling of payment transactions or payment messages between: (a) three or more participants; or (b) two or more participants provided the formal arrangement between these participants is designated by the Central Bank as a payment system pursuant to the PSA.”

Open banks and technology providers are subject to duties of confidentiality under Bahamian law. Depending on the nature of activities of the facilitator, they may be subject to a combination of duties of confidentiality. 

Where a facilitator of open banking meets the common law test of financial institution it is subject to a common law duty of confidentiality. This common law duty imposes an obligation to keep account information and the affairs of the financial institution’s clients confidential, subject to the limited disclosure exceptions of:

• disclosures required by compulsion of law;
• disclosures in the public interest;
• disclosures to protect the interests of the financial institution; and
• disclosures made with the express or implied consent of the client (see Tournier v National and Provincial Union Bank of England [1924] 1 KB 461). 

Where a facilitator of open banking is a bank licensed under the BTCRA, it is subject to the statutory duty of confidentiality imposed by the BTCRA, which prohibits persons including directors, officers, employees and agents of a bank from disclosing information relating the identity, assets, liabilities, transactions or accounts of the bank’s clients. This duty is subject to a limited number of exceptions, which are similar to the exceptions to the common law duty.     

Where a facilitator of open banking collects or processes personal data in The Bahamas, it is subject to the statutory duty of confidentiality imposed by data protection legislation, namely, the DPA, which requires data processors to keep the personal information of data subjects confidential. This legislation also imposes penalties for any unauthorised disclosure. 

The general position with respect to fraud is:

• a person makes a false or dishonest statement, presenting it as true;
• the injured party relies on that false or dishonest statement; and
• the injured party suffers a loss as a result of their reliance on the false or dishonest statement.

Fraud does not have a special or prescribed definition in financial services and/or fintech; the general definition under criminal law is applied.

The regulators have played close attention to:

• relationship investment scams, eg, crypto-investment scams and romance scams;
• digital assets fraud;
• unregulated investments;
• securities fraud;
• advance fee fraud;
• Ponzi schemes; and
• pyramid schemes.

The circumstances in which a fintech provider could be responsible for losses suffered by a customer are not determined by a single rule. The matter turns on the relevant regulatory framework, the allocation of risk in the governing agreements, and the factual context in which the loss arises. Liability would typically stem from breaches of duty, either under contract or tort, where the standard applicable could include negligence, gross negligence, wilful misconduct or fraud. 

Fintech service providers typically seek to limit their liability contractually through their general terms and conditions, waivers for the use of their services or platform, or specific agreements with customers.