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Bahamas in talks with ‘over a dozen’ cryptocurrency firms despite FTX crash
The Bahamas’ legal affairs minister has said the country does not believe in “over-regulation,” even after cryptocurrency exchange FTX collapsed on its shores, as more digital asset firms flock to the island.
Ryan Pinder, who is also the Bahamas’ attorney general, told Financial News that “over a dozen” global cryptocurrency firms are in talks to enter the jurisdiction, amid a market recovery and updates to the country’s digital asset regulations.
The Bahamas began drafting its Digital Assets and Registered Exchanges Act in 2019, which received parliamentary approval the following year.
“We were one of the first countries to regulate the digital asset space. FTX and several digital asset companies applied for a license and FTX was approved in September 2021. FTX was only in the Bahamas for a year before the crash,” Pinder told Financial News.
Sam Bankman-Fried’s FTX crash was the biggest in the history of the cryptocurrency market. The exchange was valued at $32 billion before it went bankrupt.
FTX’s parent entity and its founder Sam Bankman-Fried were based in the Bahamas, which caused reputational damage to the Caribbean nation.
“When FTX came along, it was the gold standard. But the truth is that the gold standard can also collapse. Whenever a shock event occurs, there is a wait-and-see approach. That’s what happened after the FTX collapse,” Pinder said.
“However, we have not seen anyone leave the jurisdiction. The OKX digital asset exchange is also licensed in the jurisdiction and is still operating,” he added.
The Bahamas is now working on a revised version of the Digital Assets and Registered Exchanges Act, which Pinder said should be passed in the coming weeks and will weed out “bad actors.”
“We don’t believe in over-regulation. We want businesses to thrive. We believe in just enough regulation to differentiate us from others,” he said.
The digital asset market has been hit hard by high-profile bankruptcies during the crypto winter of 2022. In addition to FTX, BlockFi, Celsius, Voyager Digital, and Three Arrows Capital also went bankrupt in 2022. Exchange giant Binance was hit with a $4.3 billion fine by US regulators last year.
But things have started to change this year, with the approval of spot bitcoin ETFs in the United States and growing institutional adoption. Banks, asset managers and hedge funds have started to bet big on the emerging asset class again.
Bitcoin hit an all-time high of $73,000 in March, but has since fallen about 16%.
Write to Bilal Jafar to bilal.jafar@dowjones.com