In a way to show it has learnt from the collapse of FTX Derivatives Exchange, the Securities Commission of the Bahamas (SCB) has introduced a whole new set of rules that will strictly guide the activities of Virtual Assets Service Providers (VASPs) looking to do business on its shores.
In addition to its existing rules, the SCB said it has strengthened the financial and reporting standards for trading platforms, custody service providers, staking operators and asset managers in the space.
Disguised in the Digital Assets and Registered Exchanges (DARE) Bill, the SCB noted that it will increase its monitoring and evaluation for crypto companies and benchmark its standards in line with what is applicable in other advanced jurisdictions like the European Union, Hong Kong and the United States.
The SCB is taking a definitive approach where it will require exchanges to maintain adequate systems and controls that are a true reflection of their growth. The SCB came under fire after the collapse of the FTX Exchange as its oversight role was called into question by industry leaders and observers including the bankrupt exchange’s new CEO, John Ray III.
Bahamas SCB Bans Algorithmic Stablecoin
The genesis of the broader digital currency ecosystem’s collapse stems from the depegging of the TerraUSD (UST) stablecoin from the Terraform Labs about a year ago. The collapse of these stablecoin had such a ripple effect that cascaded to the declaration of bankruptcy by Genesis Trading.
As a way to prevent related collapse from entities operating on its shores, the Bahamas SCB has banned algorithmic stablecoins altogether.
“The DARE Bill 2023 establishes a new and comprehensive regulatory framework for stablecoins. The amendments provide a clear definition for stablecoins, provide for the registration of existing stablecoins, specify acceptable forms of reserve assets and establish new requirements for custody and management, segregation, reporting and redemption of reserve assets. The issuance of algorithmic stablecoins is expressly prohibited,” the announcement reads.
The SCB said the rules are currently open for public consultation until the end of May. Additionally, the SCB is counting on pushing the proposals in the DARE Bill to become law by the end of the second quarter.
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