Members of Perficient’s Digital Asset Team have advised followers in multiple online articles about the digital asset revolution and relevant regulations affecting the same in the United States. Some of these online articles can be found here:
Given the uptick in activity in the digital assets space in the Bahamas, we thought we would take a moment to explore crypto “Bahama Mama” style. Let’s start with a checklist:
Toes in the sand? Check.
Drink in the hand? Check.
Sand Dollar in your FTX Account? What?
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Traditionally reliant on tourism, the Bahama economy suffered significantly during Covid. As reported by the World Bank, in 2021 the GDP of The Bahamas was $9.91 Billion, down 14.5% (and down even more from the $13.16 Billion in 2019). The unemployment rate of The Bahamas was 13.2% in 2021. However, the government has taken numerous steps toward making the islands less dependent on tourism while hitching their economic wagon to the digital asset revolution.
In 2020, The Bahamas legislation passed two digital-asset-specific pieces of legislation: the Digital Assets and Registered Exchanges Act (the DARE Act) and the Financial and Corporate Service Providers Act (the FCSP Act), which established safeguards for the custody of digital assets.
A very significant milestone was reached when the Central Bank of the Bahamas created the Sand Dollar in October 2020. The Sand Dollar is one of the world’s first central bank digital currencies (“CBDC”).
Attracting Crypto Corporations
In 2021, FTX, the crypto derivatives marketplace, made the decision to relocate from Hong Kong to the Bahamas.
In 2022, FTX broke ground on its new headquarters in Nassau, the country’s capital. As stated by FTX founder Sam Bankman-Fried, “The proactive stance taken by The Bahamas and its regulatory bodies on cryptocurrencies” was a primary motivator for the move.” FTX plans to construct a campus costing up to $60 million with the intention of housing up to 1,000 employees. The complex will also feature a high-end hotel with 34 rooms as well as commercial space. Ryan Salame, the co-CEO of FTX, said the campus could serve as a bellwether for similar crypto companies looking to take advantage of the island country’s favorable tax and regulatory frameworks.
In April 2022, Nassau, the capital of the Bahamas, hosted the invitation-only Crypto Bahamas Conference. As stated by the Bahamian Prime Minister Philip Davis, “We have the vision to transform the Bahamas into the leading digital asset hub in the Caribbean.” There to hear PM Davis were high-profile leaders such as former US President Bill Clinton; the founder of Ark Invest Cathie Wood; former CFTC Chairman Chris Giancarlo; former UK Prime Minister Tony Blair; and NFL Quarterback Tom Brady. Discussions included topics ranging from the pace of development in the industry to regulation, as well as how digital assets fit into a modern portfolio.
Roadmap for Crypto In Bahamas Provided in White Paper
On April 21, the Bahamian government published a brief white paper that outlined the country’s digital asset strategy for the next four years.
To ensure continued government support of the crypto and fintech sectors, the White Paper announced the establishment of the Digital Policy Council (DPC) headed by the Prime Minister, the Financial Secretary, the Executive Director of the SCB, the Governor of the Central Bank of The Bahamas, and the Chair of the Digital Advisory Panel.
Supporting the Digital Policy Council is the newly established Digital Advisory Panel (DAP), including leading digital asset experts, intended to keep digital asset and related digital developments, emerging trends, and associated risks constantly under review.
The paper also lays out plans to expand the resources of the Securities Commission of The Bahamas to bolster its role as the main crypto regulator.
To ensure that the workforce of The Bahamas is skilled enough to fill the job openings in the growing fintech and crypto sectors, the White Paper emphasized that the Bahama government will partner with the University of The Bahamas and the Bahamas Technical and Vocational Institute.
Additionally, the authorities pledged to work closely with the financial regulators, the Central Bank of The Bahamas, and the private sector on ways to enable Bahamians to access digital assets and promote wider use of the Bahamian dollar digital currency, the Sand Dollar, on the island. For example, the Bahamian government is planning on allowing Bahamians to pay their taxes using Sand Dollars.
Readers who would like to access the white paper in its entirety can find it at the following here.