The Bahamas has long been a destination for mixing glamour with low taxes and being a hub for the financial movers and players seeking to maximize their assets. It has over 400 banks, branches, or affiliates of overseas financial powerhouses and some eight of its homegrown ones making it a truly global banking hub. This position is no doubt to be maintained according to a statement by the country’s Prime Minister proposed that the Bahamas could also become the leading digital asset hub in the Caribbean at a recent crypto conference in Nassau. At the time of writing there has been a worldwide collapse of crypto prices – but such dramatic drops and recoveries have happened before, of course.
A formal white paper points up the country’s digital asset strategy for the next few years which is to be achieved in varying degrees of collaboration and consultation with some heavyweight financial hitters such as the Bank for International Settlements (BIS), the Financial Action Task Force (FATF), the Organization for Economic Cooperation and Development (OECD). Enabling residents to pay taxes in digital assets is one clear-cut proposal, so it’s safe to say the Bahamas, is a crypto and blockchain advocate. Worth knowing that the Central Bank of The Bahamas is one of the most progressive in terms of creating a central bank digital currency (CBDC). The Sand Dollar (cute!) as it is nicknamed was launched in 2020 and the Bank is working hard for it to gain wider acceptance and usage in the financial sector. Whether the Bahamas follows El Salvador and the Central African Republic in designating Bitcoin as legal tender is a whole step further down the road and it seems unlikely – especially at present.
Part of the Bahamas crypto strategy mentioned above is the allowing of citizens to pay taxes using digital assets. Although this isn’t perhaps as radical as it sounds as the country is strongly promoting the usage of its own CDBC – and getting people to pay taxes always cheers governments up. The taxation of residents’ gains on trading crypto appears to be part of normal income tax reporting without specific crypto tax guidance.
Initial Coin Offerings – ICOs
Initial Coin Offerings have gained mainstream acceptance around the world, but in the Bahamas, ICOs Initial Coin Offerings have been assessed fully by the Central Bank which sets out the criteria for sponsors and promoters of ICOs. Non-objection of the Central Bank must be obtained and if the ICO falls outside the scope of the regulated framework, the Central Bank may still object to the ICO on the basis that it poses an unmanageable risk to the SFI or The Bahamas.
Despite its size and population Bahamas is an avid blockchain and crypto economy with many specialized courses available for the study of both. Crypto start-up companies spring up regularly and many deem this evocative country to become another pint-sized crypto hot spot, along with Malta. A leading crypto derivatives exchange moved its headquarters from Hong Kong to the Bahamas in September 2021. More crypto companies are bound to follow especially after the Prime Minster’s futurist crypto vision for the country.
Transparency and security
Countries with firm regulatory guidelines inevitably fare better than crypto economies without and the Bahamas, perhaps recognizing this, has completed two pieces of legislation that should move the country forward. The Digital Assets and Registered Exchanges Act, 2020 (the DARE Act) and the Financial and Corporate Service Providers Act, 2020 (the FCSP Act) both add confidence to overseas digital assets services providers looking to locate there. Registration of exchanges and greater safeguards over the protection and custody of digital assets are important Coincub ranking initiatives.
In addition to standing Anti-money laundering and fraud laws, new legislation will regulate the issue and sale of digital tokens in the Bahamas, providing a framework for the regulation of flat exchanges, wallet services, and virtual asset service providers (VASPs) generally. Accordingly, several leading exchanges are or were considering moving to the Bahamas, at least up until the time of writing/