Central Bank Of Bahamas Deliberates About Regulatory Framework For Cryptocurrencies

By Rishma Banerjee

The Central Bank of Bahamas (CBOB), very recently released a discussion paper, which elaborates on the new regulatory framework that they have come up with, in order to regulate cryptocurrencies in the country. It also discusses the significant challenges that are raised by standard-setting bodies like the International Monetary Fund (IMF) and talks about how to combat punishable, illicit and illegal activities like money laundering, tax evasion, terrorism funding as well as the problems faced by cryptocurrencies due to their volatility and scalability.

The release of this document was first reported by Nassau Guardian, and it reads,

In addition to AML/CFT considerations, SSBs have focused on investor protection standards, advocating that regulations should treat crypto products and services similarly when they serve like purposes as products provided through the regulated financial sector.

The paper calls the current regulatory framework to be much too fragmented, which leads to difficulty in managing the “emerging risks in the fintech arena” and thus is proposing amendments that will “close any gaps concerning domestic payment services in foreign currency instruments.” They are focussing on the “fitness and propriety” of the businesses who “provide electronic money services, safety and soundness of operations, and anti-competitive practices” and are operational in the country. The document also notes down several prerequisites that have to be fulfiled by the businesses. It states,

Thus, any business contemplating operations in, or from within The Bahamas would have to demonstrate safe and sound business practices; show that they have systems in place to measure, monitor, and adequately control market and other risks; and ensure that they have in place auditable policies, practices and procedures to prevent the use of their services for criminal purposes.

The country’s government which is reportedly looking forward to using blockchain technology to get rid of corruption, and according to their Deputy Prime Minister and Finance Minister, K. Peter Turnquest, the CBOB was also looking forward to introducing a “pilot digital currency.”