Crypto company FTX made Bahamas its home, as the Government and regulators there encouraged alternative investment operators to do business  and embraced them with open arms.

Regulations would be less onerous and the Government would not be too intrusive.

“The arrival of FTX underscores the readiness of The Bahamas to be a home for global leaders in the crypto space,” said Bahamas Prime Minister Philip Davis.

FTX’s lead principal Sam Bankman Fried (also known as SBF) duly obliged and ground was broken on FTX’s global headquarters in The Bahamas. With the company now bankrupt and investors losing billions of dollars, that project is now abandoned.

SBF has been arrested and is languishing in a Bahamian jail. The new CEO of FTX has testified in Congress that SBF and his team were grossly incompetent and kept poor accounting records, choosing to run the company using QuickBooks and Slack.

There are now calls for crypto to be strenuously regulated and its viability investigated. Some say crypto still has a future and that the FTX fiasco is a set back and will invite unwarranted attention.

The Bahamas was banking on crypto and sought to create a hub for it. It issued its currency in digital form and hosted a major crypto currency conference. Anticipating a crypto bonanza, it put in place a framework for digital assets like cryptocurrency.

It enacted the much vaunted Dare Act in 2020 to regulate the industry but encountered problems enforcing regulations.

A financial sector player, who now resides in Jamaica but worked in The Bahamas, observed: “Many of the regulators and those at the Securities Commission have been there for years. Some may be well into their 70s now and are not up to speed with this new cryptocurrency paradigm. I do recall a few of them advocating for the repeal of the Glass Steagall Act and less stringent regulation.”

BAHAMAS ADDED TO EU TAX HAVEN BLACKLIST

With FTX now in the spotlight and people asking questions as to why its practices were allowed to go unchallenged, the entire financial system in The Bahamas is being evaluated.

The European Union has added The Bahamas to its tax haven blacklist. The Financial Action Task Force put The Bahamas on its grey list for further monitoring and that status was only removed two years ago.

SBF and the FTX team saw The Bahamas as inviting and friendly, a country where there are no personal capital gains, estate, gift or inheritance taxes. There is no corporate tax unless revenue is derived from within The Bahamas.

To FTX, this was a dream come true.

The Bahamas is a popular choice of many CFD platforms due to its lax regulations.

“FTX’s collapse will likely force the Bahamas and other governments to look more closely at the crypto industry,” said The Wall Street Journal.

The question now is who now has control after the fall of FTX – the SEC or Bahamian authorities? To whom does the responsibility lie to wind up FTX?

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