Deputy Prime Minister and Min. of Finance the Hon. K. Peter Turnquest introduced the Digital Assets and Registered Exchanges Bill,2020 in the House of Assembly on Wednesday, November 4, 2020. DPM Turnquest stated that the “bold” piece of legislation will provide the legal framework for a vital, new, well regulated industry in The Bahamas, expand the regulated financial service sector in The Bahamas, create financial technology, or fintech opportunities for entrepreneurs and subsequent fintech based employment opportunities for Bahamians, and provide investors new access to a well-regulated non-traditional asset class from operators in The Bahamas or via Bahamas-based service providers.
He said, “The Bill, which I refer to as the DARE Bill, was prepared by the Securities Commission of The Bahamas. The Commission regulates investment funds, securities, the capital markets, and non-bank financial and corporate service providers.” The DPM explained that Commission is responsible for ensuring market integrity in the capital markets and that appropriate investor protection mechanisms are in place. He stated that the raising of capital using digital assets, the trading of digital assets, as well as intermediary digital assets service providers and digital assets exchanges bring their own implications for the integrity of the capital markets and for investor protection. As a result, they very reasonably fall within the Commission’s regulatory scope.
DPM Turnquest expanded on the growing significance of digital assets and the related services, technologies and infrastructures undergirding them. He said, “Digital assets, as defined in the DARE Bill includes crypto-assets and digital tokens. These terms capture virtual or crypto currencies. “I am certain that the Members of this House are familiar with Bitcoin, as it is the leading, and perhaps most well-known crypto and crypto asset brand. Bitcoin itself has been around since 2009 and has enjoyed meteoric, if unsteady, growth,
since its inception. Bitcoin succeeded in bringing digital assets to the fore as a new asset class that has only increased in prominence over the years since its introduction.”
He noted that the crypto data website CoinMarketCap.com reported that at 2nd of November this year, BitCoin’s market capitalisation was 250 Billion US-Dollars, accounting for 63 per cent of cryptocurrency market capitalisation of 394 Billion US Dollars.
DPM Turnquest said data indicates that the number of crypto assets users and accounts are also increasing. There were a total of 101 million unique users of crypto assets the third quarter of 2020, according to the 3rd Global Cryptoasset Benchmarking Study, produced by the Cambridge Centre for Alternative Finance, Judge Business School, University of Cambridge.
“This represented a tremendous growth spurt of 189 per cent from the second edition of the Study which had been, published two years earlier, and reported at the time that there were about 35 million cryptoasset users globally.” He stated that according to the same study, the number of accounts at cryptoasset’s service providers increased from 139 million in its 2018 study, to 191 million in the 2020 study, representing a 37 per cent increase over the two-year period.
“To further highlight the growing importance of this new asset class to investors globally, I cite research from Fidelity Digital Assets’ Institutional Digital Assets Report from June of this year. He explained that the survey of almost 800 institutional investors across the US
and Europe indicated that 36 per cent of respondents are invested in digital assets, and that 6 out of 10 believe digital assets “have a place in their investment portfolio”. According to the report, over 80 per cent of investors indicated that they would be interested in institutional investment products that hold digital assets.
The DPM said, “As an international financial centre with a considerable wealth management focus, this trending investor interest speaks to the potential for Bahamas based wealth management experts to offer financial service related to digital assets. Of course, like with the introduction of all other financial products, there is a need to create a legal framework to govern the space.”