Bahamas -- Securities Classification Regulatory Overview

The Bahamas classifies cryptocurrency tokens as securities under the Securities Industry Act (SIA), 2011, if they exhibit characteristics of traditional securities (e.g., equity or debt instruments) as defined in Part I of the SIA's First Schedule; otherwise, non-security tokens fall under the Digital Assets and Registered Exchanges Act (DARE Act), 2024.[1][4][6]

Legal Test for Classification

The SCB applies a facts-and-circumstances analysis akin to the Howey test to distinguish utility tokens (for platform consumption, not investment) from investment tokens or securities, considering profit expectations, issuer control, and decentralization—though not explicitly labeled "Bahamas test" in official guidance.[1][5] Section 2 of the DARE Act defines "digital assets" and differentiates types, while SIA Section 198(1) exempts certain virtual assets from securities treatment; security tokens (e.g., those with profit rights, revenue shares, or asset claims) are regulated under SIA, not DARE.[1][4]

Tokens Considered Securities

• Security tokens: Digital tokens mirroring SIA securities, such as those entitling holders to profits, revenues, assets, or distributions from issuers/pools.[4]
• Asset tokens: Claims against issuers backed by real-world assets, deriving value from underlyings (secured, collateralized, or stability-focused); often securities if investment-like.[1][4]
• Investment tokens: Designed for returns, even with utility features; mixed-purpose tokens require case-by-case review.[1]
• Exclusions: Pure utility tokens, certain stablecoins/NFTs (if non-security under DARE), closed-loop/non-fungible/non-exchangeable tokens, and payment tokens (under Payment Systems Act, 2012).[1][2][4][6]

Registration/Exemption Requirements for Issuers

Token issuers must register as Digital Asset Service Providers (DASPs) with the Securities Commission of The Bahamas (SCB) before issuing/offering tokens in/from the Bahamas; apply at least 45 days prior for token registration.[3][4] Submit an offering memorandum to SCB for approval (Part IV, DARE Act) detailing risks/structure; stablecoin issuance is restricted.[1][3] Exemptions apply to non-public, closed-loop, or prescribed non-securities; SIA governs security token offerings with full securities registration unless exempted.[1][4]

Secondary Trading Rules

Secondary trading of non-security digital tokens occurs on registered DARE exchanges or platforms; DASPs (e.g., exchanges, brokers, market makers, custodians) must be SCB-registered.[3][4] Security tokens follow SIA rules for secondary markets (e.g., licensed broker-dealers). Crypto-to-crypto/fiat exchanges (centralized/decentralized) require DASP licensing; wallet/custody services included.[2][3][4]

Enforcement Examples

SCB enforces via compliance orders, administrative penalties, and business restrictions for DARE/SIA violations (e.g., unregistered issuance/trading).[4] No specific cases detailed in results, but SCB initiated 2018 review leading to DARE; ongoing oversight of DASPs for AML/KYC under DARE Rules, Anti-Terrorism Act 2018, and Financial Transactions Reporting Act 2018.[3][6]

Key Legislation/Guidance (official/recent sources):

• DARE Act, 2024: https://charltonsquantum.com/wp-content/uploads/docs/bahamas-crypto-guide.pdf[1]
• SIA, 2011: Referenced in https://www.scb.gov.bs/wp-content/uploads/2023/04/The-Bahamas-Approach-to-the-Regulation-of-Digital-Asset-Businesses.pdf[6]
• SCB Guidance: https://www.scb.gov.bs/wp-content/uploads/2023/04/The-Bahamas-Approach-to-the-Regulation-of-Digital-Asset-Businesses.pdf[6]