On-shore VASP in Bahamas

Exchanges: Trading, exchanging cryptocurrencies (fiat-to-crypto, crypto-to-crypto, centralized/decentralized), derivatives, options, broker-dealer services.

Custody providers: Custodial services using encrypted keys, wallet services, administration of crypto portfolios, staking.

Payment processors: Accepting payments in digital assets, token issuance/ICOs, transactions on behalf of clients.

Capital: Minimum requirements vary from $150,000 to $500,000 (exact amount assessed case-by-case by SCB based on business model and risks).

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.

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.

Other: Corporate governance standards, risk management, technology security, reporting/documentation, operational insurance, data protection.

Incorporate legal entity: Register an IBC via Registrar of Companies (submit incorporation documents/fees; IBC Act 2020 applies).

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.

Secure local elements: Registered office/agent, appoint compliance officer.

Submit to SCB: Complete application with fees ($3,000 application fee, $10,000 annual fee, plus others); SCB reviews for compliance.

Approval and ongoing: SCB authorizes specific services; no expansion without re-approval. Timeline not fixed but involves comprehensive evaluation.

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The Digital Assets and Registered Exchanges Act (DARE Act) was originally enacted in 2020 and subsequently amended, including by the Digital Assets and Registered Exchanges (Amendment) Act, 2024.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).

IBC Act 2020: Company incorporation; https://www.scb.gov.bs/legislation/.

The Digital Assets and Registered Exchanges Act (DARE Act) was originally enacted in 2020 and subsequently amended, including by the Digital Assets and Registered Exchanges (Amendment) Act, 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).

Digital Assets and Registered Exchanges (DARE) Rules: Core rules applying AML/CFT/CPF to DABs, including Travel Rule compliance. [https://www.scb.gov.bs/wp-content/uploads/2023/04/The-Bahamas-Approach-to-the-Regulation-of-Digital-Asset-Businesses.pdf]

Proceeds of Crime Act 2018 (POCA), Anti-Terrorism Act 2018 (ATA), and FCSPA Rules 2019: Integrate DABs into broader framework.

Originating VASPs: Identify originator, obtain/verify required data, screen for sanctions, retain records, and share with beneficiary VASPs.

Beneficiary VASPs: Obtain/hold accurate data and make it available to authorities on request.

No mandated technical solution (e.g., interoperability challenges persist globally). Sanctions screening against lists like OFAC, UN, EU is required before transactions.

Entity Targeted: FTX Trading Ltd. and Samuel Bankman-Fried (CEO and co-founder). Violation Type: Securities fraud scheme defrauding equity investors. Penalty Amount: Not specified in available results. Outcome: FTX filed for bankruptcy after a spike in customer withdrawals exposed an $8 billion shortfall in accounts. The SEC charged Bankman-Fried with orchestrating a scheme that defrauded equity investors; FTX had raised more than $1.8 billion from investors, including approximately $1.1 billion from about 90 U.S.-based investors. The Securities Commission of the Bahamas subsequently froze assets of one of FTX's subsidiaries.