Bahamas -- Licensing Requirements Regulatory Overview
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The Bahamas regulates cryptocurrency and virtual asset businesses (referred to as Digital Asset Service Providers or DASPs) under a licensing regime administered by the Securities Commission of The Bahamas (SCB), primarily through the Digital Assets and Registered Exchanges Act, 2024 (DARE Act). There is no mere registration option without licensing; all entities must obtain prior SCB authorization before operating, with Section 9 of the DARE Act prohibiting unlicensed digital asset services[4][2][3].
Required Licenses
A single DARE license covers multiple activities, including:
- Exchanges: Trading, exchanging cryptocurrencies (fiat-to-crypto, crypto-to-crypto, centralized/decentralized), derivatives, options, broker-dealer services[3][5].
- Custody providers: Custodial services using encrypted keys, wallet services, administration of crypto portfolios, staking[3][5].
- Payment processors: Accepting payments in digital assets, token issuance/ICOs, transactions on behalf of clients[3].
No separate licenses are specified for these categories; the DARE license encompasses them, subject to SCB approval of specific services[2][6].
Key Requirements
- Capital: Minimum requirements vary from $150,000 to $500,000 (exact amount assessed case-by-case by SCB based on business model and risks)[2].
- AML/KYC: Mandatory compliance with AML/CFT, including risk assessments, reporting violations, KYC procedures; governed by DARE Act (Part III, Sec. 33-35), Comprehensive Review Update Policy, Digital Assets and Registered Exchanges Rules, Anti-Terrorism Act 2018 (ATA), Financial Transactions Reporting Act 2018 (FTRA), Proceeds of Criminal Activity Act[3][1][2].
- Local presence: Incorporation as an International Business Company (IBC) required, with a registered office/agent in the Bahamas; appointment of local compliance officer, directors, and senior management subject to fitness/propriety evaluation[1][2][3].
- Other: Corporate governance standards, risk management, technology security, reporting/documentation, operational insurance, data protection[2][4].
Application Process
- Incorporate legal entity: Register an IBC via Registrar of Companies (submit incorporation documents/fees; IBC Act 2020 applies)[1][2][3].
- Prepare documents: Business plan, proof of capital, director/shareholder details (fitness/propriety checks for directors, CEO/CFO/COO, compliance officer, MLRO, key shareholders), AML/KYC policies, governance/risk management frameworks[2][4].
- Secure local elements: Registered office/agent, appoint compliance officer[2].
- Submit to SCB: Complete application with fees ($3,000 application fee, $10,000 annual fee, plus others); SCB reviews for compliance[1][4].
- Approval and ongoing: SCB authorizes specific services; no expansion without re-approval. Timeline not fixed but involves comprehensive evaluation[4][6].
Specific Regulatory References
- DARE Act 2024: Core law (Parts II/III, Sec. 9, 18-21, 33-35); available via SCB website: https://www.scb.gov.bs/legislation/.
- Digital Assets and Registered Exchanges Rules: AML/KYC details; https://www.scb.gov.bs/.
- IBC Act 2020: Company incorporation; https://www.scb.gov.bs/legislation/.
- SCB Guidance: "The Bahamas' Approach to the Regulation of Digital Asset Businesses" (PDF): https://www.scb.gov.bs/wp-content/uploads/2023/04/The-Bahamas-Approach-to-the-Regulation-of-Digital-Asset-Businesses.pdf[8].
- Full SCB resources: https://www.scb.gov.bs/digital-assets/[4][8].
Source Data
**Exchanges**: Trading, exchanging cryptocurrencies (fiat-to-crypto, crypto-to-crypto, centralized/decentralized), derivatives, options, broker-dealer services[3][5].
**Custody providers**: Custodial services using encrypted keys, wallet services, administration of crypto portfolios, staking[3][5].
**Payment processors**: Accepting payments in digital assets, token issuance/ICOs, transactions on behalf of clients[3].
**Capital**: Minimum requirements vary from **$150,000 to $500,000** (exact amount assessed case-by-case by SCB based on business model and risks)[2].
**AML/KYC**: Mandatory compliance with AML/CFT, including risk assessments, reporting violations, KYC procedures; governed by DARE Act (Part III, Sec. 33-35), Comprehensive Review Update Policy, Digital Assets and Registered Exchanges Rules, Anti-Terrorism Act 2018 (ATA), Financial Transactions Reporting Act 2018 (FTRA), Proceeds of Criminal Activity Act[3][1][2].
**Local presence**: Incorporation as an **International Business Company (IBC)** required, with a registered office/agent in the Bahamas; appointment of local compliance officer, directors, and senior management subject to fitness/propriety evaluation[1][2][3].
Other: Corporate governance standards, risk management, technology security, reporting/documentation, operational insurance, data protection[2][4].
**Incorporate legal entity**: Register an IBC via Registrar of Companies (submit incorporation documents/fees; IBC Act 2020 applies)[1][2][3].
**Prepare documents**: Business plan, proof of capital, director/shareholder details (fitness/propriety checks for directors, CEO/CFO/COO, compliance officer, MLRO, key shareholders), AML/KYC policies, governance/risk management frameworks[2][4].
**Secure local elements**: Registered office/agent, appoint compliance officer[2].
**Submit to SCB**: Complete application with fees (**$3,000 application fee, $10,000 annual fee**, plus others); SCB reviews for compliance[1][4].
**Approval and ongoing**: SCB authorizes specific services; no expansion without re-approval. Timeline not fixed but involves comprehensive evaluation[4][6].
**DARE Act 2024**: Core law (Parts II/III, Sec. 9, 18-21, 33-35); available via SCB website: https://www.scb.gov.bs/legislation/.
The Digital Assets and Registered Exchanges Act (DARE Act) was enacted in 2020 (not 2024), and it regulates token issuance, exchanges, custodians, stablecoins, NFTs, staking, DeFi platforms, and requires AML/CFT compliance, with licensing mandates for Digital Asset Service Providers (DASPs).
**IBC Act 2020**: Company incorporation; https://www.scb.gov.bs/legislation/.
SCB Guidance: "The Bahamas' Approach to the Regulation of Digital Asset Businesses" (PDF): https://www.scb.gov.bs/wp-content/uploads/2023/04/The-Bahamas-Approach-to-the-Regulation-of-Digital-Asset-Businesses.pdf[8].
**Digital Assets and Registered Exchanges Act, 2024 (DARE Act)**: Enacted in 2024, it regulates token issuance, exchanges, custodians, stablecoins (with reserve backing and audits under Section 49), NFTs, staking, DeFi platforms (Sections 5, 15, 33), and requires AML/CFT compliance (Sections 18-21, 33-35).[2][3][4][5]
Earlier developments: Draft DARE Bill 2019 and Central Bank Discussion Paper (November 2018).[1][6]
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