The Benefits of Running a Digital Asset Business in the Bahamas
The Bahamas is an attractive prospect for digital businesses as it aspires to be “the leading digital asset business hub in the Caribbean and a global leader in the progressive regulation of businesses in this profoundly innovative space”. The Bahamas was amongst the first nations to comprehensively regulate digital asset businesses and initial token offerings (ITOs), demonstrated by the introduction of the Digital Assets and Registered Exchanges Act, 2020 (the DARE Act). Alongside the introduction of the DARE Act, the Bahamas introduced the Financial and Corporate Service Providers Act, 2020 (the FCSP Act), in an effort to maintain its position at the cutting edge of countries in which digital asset businesses can be guaranteed a well-regulated, safe environment.
Bahamian Digital Asset Policy
The government of the Bahamas released a policy on 20 April 2022 which sets out a vision and framework to guide Bahamian digital asset policy until 2026. The policy follows best practices and rigorous standards while simultaneously meeting international obligations. The Bahamian government has taken examples of successes in countries such as Gibraltar, Switzerland, Liechtenstein, and France to inform its approach to digital assets. It has also considered existing and proposed regimes in the USA, UK, the EU, Dubai, Singapore, Japan, and Australia.
The Bahamian government has expressed its commitment to fighting money laundering, illicit and threat financing and keeping its legal and regulatory frameworks relating to digital assets up to date and in line with international standards.
Also mentioned in ‘The Future of Digital Assets in The Bahamas’ policy is the crucial global issue of sustainability. The policy acknowledges that as a nation, the Bahamas should play its part in addressing sustainability and climate change issues. The policy mentions exploring the feasibility of introducing incentives to digital asset businesses that prioritise energy efficiency and establishing a system of carbon credits. Some of the additional key benefits of running a digital asset business in the Bahamas are explained below.
The Bahamas has established a progressive regulatory framework for digital assets. The government has introduced the Digital Assets and Registered Exchanges Act (DARE) to regulate digital assets and provide a legal framework for token issuers, exchanges, and other related businesses. This regulatory clarity and support can foster trust and confidence among businesses and investors.
The Bahamas offers a favourable tax environment for businesses. There is no corporate, capital gains, or income tax on earnings generated by digital asset businesses. This can lead to significant cost savings and increased profitability for companies operating in this sector.
Privacy and Confidentiality
The Bahamas has a strong tradition of respecting privacy and confidentiality. The jurisdiction has strict laws in place to protect the privacy of individuals and businesses. This can be particularly important for digital asset businesses, which often deal with sensitive financial and personal information.
The Bahamas is strategically located near major financial centres in North America. Its geographic location makes it convenient for businesses to interact with clients and partners in the United States and other international markets.
Stable Political and Legal System
The Bahamas has a stable political system based on the rule of law. The legal system is rooted in English common law, providing a familiar and reliable legal framework for businesses. This stability can give digital asset businesses confidence in the long-term viability and security of their operations.
The Bahamas has a strong international reputation as a leading financial centre. Its well-established financial services industry, including banking and wealth management, can provide digital asset businesses with access to experienced professionals and a wide range of financial services.
Supportive Business Environment
The government of the Bahamas actively promotes and supports the growth of the digital asset industry. It collaborates with industry stakeholders to create a favourable business environment, including offering incentives, streamlined processes, and access to necessary infrastructure.
Becoming Licensed to Start Running a Digital Asset Business in the Bahamas
It’s important to remember that regulations, laws, and business conditions evolve over time, which is why you should always consult legal and financial professionals to assist with researching your chosen location and applying for digital asset business licensing.
Following the transposition of the Digital Assets and Registered Exchanges (DARE) Act into Law in the Bahamas, a legal definition for digital assets and a regulatory framework was established for digital asset businesses and activities. Under the Act a person or entity intending to provide a digital asset business service must apply to the Securities Commission of the Bahamas for registration.
Our team can assist with all aspects of VASP and CASP license applications, so please contact us for more information about your specific requirements.