← Regulations / Bahamas / Operating Models / Self-custodial wallet

Self-custodial wallet / non-custodial software in Bahamas

Publisher of software where users hold their own private keys. The publisher never holds, controls, or has access to user funds.

Conditional AI-Generated · Unreviewed

Self-custodial wallet is conditionally permitted in Bahamas with a local entity, subject to AML obligations and none licensing burden.

Verdict Details

Permitted
conditional
Local entity required
Yes
Licensing burden
None
Last updated
2026-07-13

AML Obligations

  • No direct AML obligations attach to the software publisher because the publisher never holds, controls, or has access to user funds — the self-custodial model does not trigger the custody or exchange licensing categories under the DARE Act.
  • If the software publisher also provides any ancillary services that involve custody, exchange, or payment processing (e.g., a built-in swap feature that routes through the publisher's liquidity), that additional service could trigger AML obligations under DARE Act Part III, Sec. 33-35.
  • Any AML obligations would only arise if the publisher is deemed to be engaging in a regulated "digital asset business" as defined under the DARE Act — mere software publishing without intermediation of funds does not trigger such classification.

Key Restrictions

  • The publisher must not provide any custody, exchange, staking, or payment-processing services that involve holding, transmitting, or controlling customer digital assets — doing so would trigger the full DARE Act licensing regime.
  • If the software interacts with the Bahamas financial system (e.g., integration with local banks, payment rails), additional oversight from SCB may apply.
  • The publisher must avoid marketing or structuring the software in a way that implies it is a registered exchange, custodian, or payment processor under Bahamian law.

Key Risks

  • Regulatory ambiguity: The DARE Act's definitions of 'digital asset business' could be interpreted broadly by SCB to extend to certain wallet software, especially if the publisher offers integrated swap/DeFi features that touch custody or order routing.
  • Enforcement precedent: The Bahamas is the jurisdiction where FTX was incorporated and subsequently collapsed; regulators may be more vigilant and expansive in interpreting what constitutes a regulated digital asset business.
  • Potential consumer-protection exposure: Even without a licensing requirement, failure to provide clear disclosures about non-custodial status, security risks, and lack of insurance could attract regulatory or civil liability.

Evidence

This verdict synthesizes the following facts. Each fact links to its primary source(s).

licensing 100% confidence

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

[primary] scb.gov.bs — Legislation [primary] scb.gov.bs [primary] scb.gov.bs — The Bahamas Approach To The Regulation Of Digital Asset Businesses
licensing 95% confidence

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

[primary] scb.gov.bs — Legislation [primary] scb.gov.bs [primary] scb.gov.bs — The Bahamas Approach To The Regulation Of Digital Asset Businesses
licensing 95% confidence

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

[primary] scb.gov.bs — Legislation [primary] scb.gov.bs [primary] scb.gov.bs — The Bahamas Approach To The Regulation Of Digital Asset Businesses
licensing 95% confidence

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.

[primary] scb.gov.bs — Legislation [primary] scb.gov.bs [primary] scb.gov.bs — The Bahamas Approach To The Regulation Of Digital Asset Businesses
licensing 100% confidence

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).

[primary] scb.gov.bs — Legislation [primary] scb.gov.bs [primary] scb.gov.bs — The Bahamas Approach To The Regulation Of Digital Asset Businesses
licensing 100% confidence

DARE Act 2024: Core law (Parts II/III, Sec. 9, 18-21, 33-35); available via SCB website: https://www.scb.gov.bs/legislation/.

[primary] scb.gov.bs — Legislation [primary] scb.gov.bs [primary] scb.gov.bs — The Bahamas Approach To The Regulation Of Digital Asset Businesses

Verdict Attribution

Source:
AI-Generated · Unreviewed
AI synthesized:
2026-07-13 (deepseek-chat)
Last updated:
2026-07-13
Confidence:
medium

This verdict was produced by an AI model from the underlying facts. Confirm with counsel before relying on it for material decisions.

Conditional — a self-custodial wallet publisher that never holds or controls user keys or funds does not trigger the DARE Act's licensing or AML obligations, provided it does not also offer custody, exchange, staking, or payment-processing services; however, regulatory definitions could be interpreted broadly, so a local entity and careful scoping of services are advisable.

Questions this verdict aims to answer

  • Does software publishing trigger VASP / MSB classification?
  • Do AML obligations attach when no custody exists?
  • What disclosure or consumer-protection rules apply?