The DARE Act — Bahamas' Digital-Assets Regulatory Framework, and the FTX Collapse

In November 2020, the Bahamas enacted the Digital Assets and Registered Exchanges Act (DARE Act), one of the earlier comprehensive statutory frameworks worldwide for licensing and regulating digital-asset businesses and token offerings, administered by the Securities Commission of The Bahamas (SCB). The Act set requirements covering permissible participants, minimum capital, AML/CFT compliance and SCB approval, positioning the Bahamas as a credible jurisdiction for digital-asset firms.

Several globally recognised digital-asset businesses registered in the Bahamas under the framework, most prominently FTX Digital Markets Ltd, an affiliate of the FTX cryptocurrency exchange, which relocated its global headquarters to Nassau in 2021.

When FTX collapsed amid allegations of misused customer funds, the SCB acted quickly: on 10 November 2022 it froze FTX Digital Markets' assets, suspended its DARE Act registration and applied to the Supreme Court of The Bahamas for provisional liquidation; on 12 November 2022, acting under court authorisation, it directed the transfer of FTX Digital Markets' remaining digital assets to a secure location amid fears of hacking. In January 2025, the Supreme Court sanctioned an agreement addressing the SCB's regulatory-penalties claim of US$221.55 million against the estate. Rather than retreat from the sector, the Bahamas passed a substantially updated DARE Act 2024 in July of that year.

This is included as a cautionary case: DARE succeeded in attracting a marquee international digital-asset business, and the regulator's documented response — a same-week asset freeze and license suspension — compares favourably with slower responses seen in other FTX-related jurisdictions. But the episode also shows that a licensing regime, however well-designed on paper, could not prevent the fraud alleged at the licensed entity itself, and the sector's association with the Bahamas is now inseparable from the FTX failure.