The Bahamas DARE Act 2024 regulates staking, stablecoins and custody
30 JULY 2024, NASSAU
The Bahamas enacted the Digital Assets and Registered Exchanges Act, known as the DARE Act, on 30 July 2024. The Act regulates digital asset activities including staking, stablecoins and custody, setting a legal framework for a growing sector. It also bans algorithmic stablecoins outright, drawing a firm line around a model it treats as too risky.
The ban on algorithmic stablecoins reflects a clear judgment. These coins try to hold their value through algorithms rather than reserves, a design that has failed dramatically in some high-profile cases. By excluding them, The Bahamas keeps a risky model out of its regulated framework and signals that it prioritises user protection in how it defines the sector.
Custody is where the Act meets cryptography. Safeguarding digital assets depends on cryptographic keys and algorithms, so regulating custody brings cryptographic security into scope. As quantum-vulnerable algorithms become a concern, firms operating under the Act have a basis to consider quantum risk in how they protect the assets they hold.
Why it matters. The DARE Act gives The Bahamas a structured regime for digital assets, covering staking, stablecoins and custody while banning algorithmic stablecoins. Its custody rules tie cryptographic security to regulation, which gives quantum risk a place in the framework. Firms under the Act can treat the cryptography protecting customer assets as a supervised concern that quantum developments will increasingly affect.