Building upon the foundation laid by the DARE Act 2020, the legislation introduces comprehensive reforms designed to address the evolving landscape of digital assets and cryptocurrency markets.

Key highlights of DARE 2024 include:

1. Expanded scope: The law now encompasses a wider range of digital asset activities, including advisory or management services, digital asset derivatives and staking services. The Securities Commission also has the flexibility to add additional activities as the space evolves.

2. Enhanced digital asset exchange requirements: Digital asset exchanges must adhere to increased investor and consumer protection requirements including stringent systems and controls requirements, which enhance the integrity and security of transactions.

3. Robust custody framework: New provisions bring custody of digital assets or custodial wallet services under DARE 2024 and enhance the protection of client interests by requiring accessibility of digital assets, among other provisions.

4. Staking framework: DARE 2024 introduces a first-of-its-kind disclosure regime for staking digital assets belonging to clients or the operation or management of a staking pool as a business.

5. Comprehensive stablecoin framework: The Act provides a clear definition for stablecoins, provides for the registration of existing stablecoins, specifies acceptable forms of reserve assets and establishes new requirements for custody and management, segregation, reporting and redemption of reserve assets. The issuance of algorithmic stablecoins is expressly prohibited.

6. Digital asset issuers: Investor protection measures are enhanced by the inclusion of fit and proper standards for digital asset issuers, in addition to new disclosure and financial reporting requirements. 

Other notable provisions of DARE 2024 are "robust standards addressing conflicts of interest and connected third-party relations." The Act also addresses the categorization of non-fungible tokens as either "financial or consumer assets", provides for liquidity and reporting requirements, prohibits privacy token issuance and introduces certain restrictions on proof-of-work mining. 

This policy paper provides a synopsis of key consumer-centric provisions provided under draft Regulations published in February 2021 for public consultation.

The draft Regulations are intended to enhance the existing legislative framework governing Payment Services Providers (PSPs), specific to their provision of central bank digital currency (CBDC) linked services.

These include specific obligations to safeguard the security of the financial market infrastructure, affirmed obligations around the financial integrity (AML/CFT) of digital currency transactions, and intensive focus on financial inclusion and consumer protection. After the consultation period closes on 31 March 2021, the Bank will finalise the Regulations for issuance by 1 May 2021. 

The aim of the project is for all Bahamian residents to be able to use a central bank digital currency, on a modernised technology platform, "with an experience and convenience — legally and otherwise — that resembles cash", even though they should not expect the anonymity that comes with its use.

"It is expected that this will allow for reduced service delivery costs, increased transactional efficiency, and an improved overall level of financial inclusion," the central bank said.

The central bank said that the first phase of the rollout, "focused on the immediate readiness within the private sector", will cover all three tiers of authorised accounts. The second phase, which is expected for early to mid-2021, will target government services and public utilities.

Further, the sand dollar has undergone a "rigorous cybersecurity assessment" so as to reassure the public about the safety of conducting online transactions. The digital currency's infrastructure is also said to incorporate strict attention to confidentiality and data protection.

"Each wallet provides a unique set of data encryption to ensure privacy and confidentiality. However, all transactions are linked to an anti-money laundering/counter financing of terrorism (AML/CFT) engine to safeguard regulatory compliance and governance," the central bank said.

The central bank added that the digital currency framework will rely on an evolved regulatory structure for domestic payments and other financial services. It said:

"The Central Bank remains actively engaged with stakeholders to ensure that the legal framework develops in tandem with payments systems needs. The Central Bank is also ensuring that adequate safeguards and policies are imposed to address the integrity of financial transactions, aligned with best international standards for AML/CFT and that resilient mechanisms are instituted to preserve financial stability and maintain private financial institutions’ central role in the financial intermediation process. As such, draft regulations are under final review and will be crystallised in the public space over the month of October."