The Central Bank of the Bahamas (CBOB) has recently released a discussion paper in which it outlines the regulatory framework that has been proposed to regulate cryptocurrencies in the region.
The paper includes key challenges raised by standards-setting bodies (SSB) like the International Monetary Fund (IMF). It focuses on fighting illicit activities like tax evasion, fraud, money laundering, and terrorism financing, and on the challenges cryptocurrencies face, including their volatility and scalability.
The document, first spotted by the Nassau Guardian, reads:
In addition to AML/CFT considerations, SSBs have focused on investor protection standards, advocating that regulations should treat crypto products and services similarly when they serve like purposes as products provided through the regulated financial sector.
Per the paper, the current regulatory approach to cryptocurrencies is too fragmented, which makes it difficult to manage “emerging risks in the fintech arena.” The Nassau Guard notes that while some of the SSBs’ concerns have already been addressed, the CBOB is proposing amendments that are set to “close any gaps concerning domestic payment services in foreign currency instruments.”
The central bank’s approach reportedly stresses the “fitness and propriety” of businesses operating in the country “who provide electronic money services, safety and soundness of operations, and anti-competitive practices.”
As such, the document adds, the CBOB will require businesses in the region to meet certain standards:
Thus, any business contemplating operations in, or from within The Bahamas would have to demonstrate safe and sound business practices; show that they have systems in place to measure, monitor, and adequately control market and other risks; and ensure that they have in place auditable policies, practices and procedures to prevent the use of their services for criminal purposes.
The financial regulator is also set to enforce anti-money laundering policies, and has revealed it will support an international regulatory convention that refers to cryptos as “cryptoassets.” Earlier this year the CBOB was, according to Deputy Prime Minister K. Peter Turnquest, set to introduce a “pilot digital currency.” The country’s government was at the time reportedly looking to use blockchain technology to weed out corruption.
The move comes shortly after Thailand’s Securities and Exchange Commission (SEC) revealed it’s certifying the country’s first ICO portal, which will help regulate the initial coin offering industry in order to improve security, reduce fraud, and improve know-your-customer (KYC) checks.