NASSAU, BAHAMAS — Laws governing the digital assets space will allow The Bahamas to attract an entirely new work stream of business which will be at the very forefront of global financial developments, Attorney General Carl Bethel said yesterday.
Bethel, who was contributing to debate in the Senate on the Digital Assets and Registered Exchanges Bill, 2020, and the Financial and Corporate Service Providers Bill — both of which were passed, noted that the bill is the first of what will be a total of three designed to bring regulation of the digital and virtual asset sector, and also to provide a means to regulate all future innovative technologies.
“We feel that by the passage of these laws, The Bahamas will be able to attract a whole new workstream of business, which will be at the very forefront of global financial developments, and which will create highly skilled and other jobs for Bahamians,” said Bethel.
“Over the last ten years, there has been an explosive growth in a new phenomenon technology called ‘blockchain’, more formally known as ‘distributed ledger technology’, where the same body of information is shared [across] different computer servers distributed all across the globe, which servers are pooled together virtually. Information is stored throughout the distributed servers, which can only be accessed by way of different access codes for each. The effect of this is that generally speaking it is the most secure method of storage and can only be hacked with extreme difficulty, and only in part. So, one server in the chain might be hacked and its information stolen, but that does not affect the whole of the blockchain. Hence most of the information is safe from being totally hacked.”
Bethel further noted that riding upon the blockchain technology was the rapid development of Bitcoin and other forms of digital currency.
“Because digital currency carries value in both the digital and in the real, ‘touchy-feely’ world, there was the first Bitcoin surge in value. Many persons made a lot of money and suddenly there was a ‘bust’ and many people lost a lot of money betting that digital money would continue to increase in [value]. Similarly, it was soon realized that despite ‘the boom and bust’ phase of the early years, digital currency is here to stay. Because such virtual money carries real value, the risk that virtual money can be used to hide ill-gotten wealth, launder money and to finance crime and terrorism, the world understood the urgent need for a global effort to regulate and supervise this new means of storing and transferring value,” said Bethel.
Bethel noted that the DARE Bill regulates the aspect of virtual technology that is the subject of public offerings to the general, investing public. “The first of the remaining two bills will create a Virtual Assets Authority which will, in cooperation with the Securities Commission, generally oversee the broader range of new or emerging technologies. The third bill will specifically set up a framework to properly regulate emerging technological innovations.”
The attorney general also noted that the Financial and Corporate Service Providers Bill, 2020, repeals and replaces the existing act with the same name.
“This bill will enhance the supervision and regulation of the non-bank financial system, which is comprised of a host of financial intermediaries, lenders, advisors and financial investments offered to the general public. Small pay day advance lending entities will now be fully regulated. In-store credit offered to less-well-off consumers will now be regulated when offered by the seller, say a furniture store. Hire-purchase agreements, rent-to-own transactions and other occasional transactions will all now be supervised largely with the intention to protect consumers from usury or other harmful business practices, such as predatory lending terms. Significantly, ‘financial schemes’ such as pyramid or Ponzi schemes will now be specifically outlawed,” he said.