The interest in cryptocurrencies in various countries is growing due to the fact that this kind of digital currencies is deemed handy in many aspects. If the yearly turnover of cryptocurrencies poses a significant impact on a nation’s overall economy, the government will naturally want to regulate its flow. Over the past few years, cryptocurrencies have become universal, which prompted more national authorities to strive with their regulations.

An interesting aspect of the fast-growing crypto market is the fluidity of the different products that fall within its domain. Till date, there are over 2500 types of cryptocurrencies. Although the various types of cryptocurrencies are similar in that they are actually based on the similar decentralized technology termed as blockchain, the term used to describe them varies from one country to another.

For instance, Argentina, Thailand, and Australia use the term ‘digital currency’; Germany uses ‘crypto-token’; and Canada, China, and Taiwan call it a virtual commodity. Whatever the terminology is, governments issue notices from time to time about the drawbacks of investing in the crypto market.

Various aspects of cryptocurrency regulations

These warnings are usually issued by central banks and are intended to educate the people about the differences between fiat currencies that are guaranteed by the state, and digital currencies, which are not. These warnings include the additional risk associated with the high volatility of the cryptocurrencies and the fact that many firms that conduct such transactions are not regulated. Most also warn that citizens who invest in crypto do so at their own risk and no legal remedy is available to them in case of loss.

Another aspect of the regulations is to prevent the illegal activities that cryptocurrencies might facilitate like money laundering and terrorism. Some countries have gone a step further and imposed a restriction on or even banned crypto transactions. For example, Nepal, Pakistan, Algeria, and Vietnam have banned all activities involving cryptocurrencies.

Qatar and Bahrain are a bit flexible and allow their citizens doing crypto business outside their borders. Some countries including Bangladesh, Iran, China, and Colombia imposed indirect restrictions by barring financial organizations from facilitating cryptocurrency transactions while allowing the citizens to invest in such currencies.

The Bahamas preparing for cryptocurrency regulations

The Caribbean country Bahamas is feeling the need for cryptocurrency regulations to lure crypto investments in their territory. The Securities Commission of Bahamas (SCB) has released draft regulations regarding the issuance or sale of digital tokens in the country, and how sellers and related firms conduct their businesses.

The draft has been given the name “Digital Assets and Registered Exchanges Bill, 2019” (DARE Bill, 2019) which will be available for industry and public consultation for eight weeks. The bill includes a legal framework and standards for entry into and activities in the digital token sphere.

The various sections of the bill specify who may participate, the amount of capital needed, the rules for seeking the commission’s approval, and the punishments for failure to comply. In addition, the proposed bill contains sections that ensure adherence to anti-money laundering (AML) and counter-financing of terrorism (CFT) laws, data protection measures, and actions to prevent data breaches that would endanger the client’s assets.

Any firm trying or violating the rules would pay a fine up to $500,000 or serve a maximum of ten years of imprisonment. SCB executive director Christina Rolle admitted that the country needed to ensure a proper regulatory framework for digital tokens due to the intense interest in crypto related business recently.

The Bahamas is not the only country in the region to show interest in crypto, some neighbouring countries already have regulations in place. The state of Malta has passed three laws last year regarding issuance, exchange and popularizing digital currencies. The country legalized bitcoin, ethereum, and XRP and has managed to attract exchanges like Binance to start its services in Malta.

Gibraltar also passed rules regarding issuance and trade of virtual currencies. Bahamas’ current attitude towards virtual currencies is surely a positive sign for crypto investors and exchange firms planning to operate in the country.