The Securities Commission of the Bahamas reportedly plans to strengthen the domestic cryptocurrency regulatory framework after the collapse of FTX, which was based in the island nation. One such amendment will be the prohibition of algorithmic stablecoins and privacy tokens.
The Bahamas was also where Sam Bankman-Fried (SBF) – the former CEO of FTX – lived prior to his arrest. He currently resides in his parents’ house in California, awaiting a trial that will determine whether he was guilty of committing fraud.
More Supervision After the Failure
The crash of the once-leading cryptocurrency exchange – FTX – in November was one of the darkest events in the industry last year. The entity, valued at over $30 billion at one point, revealed severe liquidity issues and could not honor customer withdrawal requests. It filed for bankruptcy protection, triggering colossal investor losses.
The demise caused many to call upon implementing stricter rules on the sector to prevent another dark-case scenario. According to a Bloomberg report, the financial watchdog of the Bahamas has taken steps in that direction.
It intends to require digital asset businesses to report their activities. The new legislation will touch upon staking, insisting users disclose their process of pledging coins to support the operation of blockchains.
The Securities Commission of the Bahamas will also enforce stricter supervision on exchanges and ban algorithmic stablecoins and privacy tokens.
“The bill provides the ability for the Commission to prescribe annual activities at digital asset businesses, as necessary,” it stated.
The FTX catastrophe is not the only reason the regulator imposed new laws. It outlined the efforts of the authorities of the European Union, Hong Kong, and New York, who have recently displayed intentions to protect crypto users by implementing stricter regulatory frameworks.
The Bahamian residents can provide feedback on the proposed rules until May 31.
The Bahamas: SBF’s Short-Lived Paradise
The picturesque island nation has gained additional popularity lately, but this time not for its turquoise waters and sandy beaches. FTX moved its headquarters from Hong Kong to the Bahamas in September 2021, outlining the Caribbean country as a crypto hub.
However, the collapse of the exchange last year and the rumors that SBF and his colleagues organized lavish parties in his luxurious penthouse on the back of failed investors left a dark stain on the island.
The police arrested the 31-year-old in his residence in the Bahamas nearly a month after the company’s downfall. He spent a week in a local prison facility before being extradited to the United States.
The American authorities surprisingly allowed him to stay in his parents’ house in Palo Alto, California, under a whopping $250 million bond. SBF, who has pleaded not guilty to the fraud charges against him, will face a trial at the beginning of October.