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Five months after the collapse of crypto exchange giant FTX drew the world’s attention to the Bahamas, the island nation is proposing tougher regulations to govern digital asset firms. 

The Securities Commission of the Bahamas, the country’s financial regulator, opened a consultation on the proposed new rules, according to a statement released Tuesday. The rules — packaged in the Digital Assets and Registered Exchanges (DARE) Bill — include expanding the definition of digital assets businesses, disclosure requirements for crypto staking activities and tighter requirements for stablecoin issuers.  

Following FTX’s collapse last year, Bahamian authorities came under repeated attack from John Ray III, the man appointed to run the exchange after the resignation and subsequent arrest of founder Sam Bankman-Fried. In legal filings, FTX’s new management said it had evidence the Bahamian government directed unauthorized access to the exchange’s systems “for the purpose of obtaining digital assets” that should be controlled by FTX. The SCB later hit back at Ray’s “material misstatements.”

FTX, under Bankman-Fried, was reportedly rife with chaotic risk management and sketchy record keeping. For anyone thinking of following in his footsteps and running a crypto exchange from the Bahamas, the DARE Bill includes a specific clause that “operators of a digital asset exchange must ensure the systems and controls used in its activities are adequate and appropriate for the scale and nature of its business.”

Bahamas bans algorithmic stablecoins

Another clause bans the issuance of algorithmic stablecoins following last May’s implosion of TerraUSD.   

“The amendments strengthen the protection mechanisms such as new disclosure and reporting requirements, specific registration obligations, and enhanced ongoing supervision for operators in the digital asset space,” the SCB said in its statement. “The proposed enhancements to the DARE legal framework allow room for digital asset businesses to innovate as the space continues to evolve and provides the flexibility for the Commission to prescribe additional rules applicable to digital asset exchanges and bespoke requirements for different categories of registrants.”

The consultation runs until May 31, and the authorities hope the bill will become law by the end of the second quarter. 

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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The latest price moves in bitcoin (BTC) and crypto markets in context for April 26, 2023. First Mover is CoinDesk’s daily newsletter that contextualizes the latest actions in the crypto markets.

After Arbitrum started distributing governance tokens to eligible decentralized autonomous organizations, some large token holders — commonly called whales — have been adding to their stacks.

Earlier today, one address holding 1.95 million Arbitrum governance tokens — worth roughly $2.7 million — received nearly $200,000 in ARB from Binance. At the time, the price of one token was $1.38, according to on-chain analysis Twitter account Lookonchain.

Not long before, a second address holding 1.78 million governance tokens — worth $2.5 million — spent 80 ETH on buying roughly $146,000 worth of ARB at $1.34 per token.

The latter address has made more than $7.3 million on successful trades, Lookonchain also noted.

Arbitrum distributing governance tokens to DAOs

Arbitrum, the leading Layer 2 network on Ethereum, began distributing governance tokens to DAOs earlier this week.

Its core team previously designated 1.13% of the overall 10 billion governance token supply — equivalent to 113 million ARB with a current value exceeding $145 million — to be distributed among qualifying projects in the Arbitrum ecosystem.

The distribution of governance tokens to DAOs is intended to help bootstrap activity on the Arbitrum network. The tokens may be allocated to projects’ treasuries or used for other objectives, as determined by the respective DAOs.

Projects receiving governance tokens include Uniswap, Sushi, Aave, GMX, Hop Protocol, Radiant Capital, Balancer, Synapse, MakerDAO, Curve, Layer Zero and 1inch.

An imperfect start

Arbitrum’s governance got off to a rocky start after the project’s foundation preemptively spent 50 million tokens without waiting for Arbitrum Improvement Proposal 1 to pass. After the news broke, AIP-1 was rejected.

However, a follow-up proposal, AIP 1.1, passed as the community broadly consented to the foundation’s receiving the 750 million ARB tokens, as planned.

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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