Following the collapse of FTX in the Bahamas, the Securities Commission plans to tighten the domestic cryptocurrency regulatory framework with amendments such as prohibiting algorithmic stablecoins and privacy tokens.
Sam Bankman-Fried (SBF), the former CEO of FTX, resided in the Bahamas before his arrest and current stay at his parents’ house in California to await trial for fraud charges.
Increased Supervision Post-Collapse
FTX’s liquidity issues and bankruptcy protection with colossal investor losses triggered demand for stricter regulation. The Bahamas’ financial watchdog plans to require digital assets businesses to report their activities, enforce stricter exchange supervision, and ban algorithmic stablecoins and privacy tokens.
“The bill provides the ability for the Commission to prescribe annual activities at digital asset businesses, as necessary,” it stated.
The Securities Commission of the Bahamas cites the EU, Hong Kong, and New York’s efforts to protect crypto users as additional reason for implementing stricter regulatory frameworks. Proposed rules allow Bahamian residents to provide feedback until May 31.
The Bahamas: A Brief Crypto Hub for SBF
Although the picturesque island nation has gained additional popularity lately, FTX’s move to the Bahamas in September 2021 outlined it as a crypto hub. FTX’s collapse and rumors of SBF organizing lavish parties in his penthouse left a dark stain on the island.
After his arrest in the Bahamas, SBF’s extradition to the US resulted in spending time in local prison before being granted bond and allowed to stay at his parents’ house in Palo Alto, California, awaiting trial beginning October.