Cashed-up crypto exchange FTX heads to Bahamas

Crypto exchange FTX is setting up subsidiaries in the Bahamas and Gibraltar, which should provide it easy access to US dollar proxies.

Crypto exchange FTX is keeping busy abroad. The company, which touts celebrity athletes Tom Brady and Steph Curry among its stakeholders, recently received permission from regulators to operate subsidiaries in Gibraltar and the Bahamas.

These tax havens should provide FTX easy access to US dollar proxies like maverick stablecoin Tether (USDT), Eurodollars in Gibraltar, and the Sand Dollar — Bahamas’ fiat-pegged central bank digital currency (CBDC).

FTX announced the regulatory approvals and the formation its new subsidiary FTX Digital Markets on Tuesday.

The Central Bank of the Bahamas launched Project Sand Dollar last October. It’s the world’s first and only CBDC pegged one-to-one with the US dollar.

So far, FTX has not expressed support for Sand Dollar onramps, trading, nor foreign exchange.

Ryan Salame, former head of over-the-counter trading at FTX parent Alameda Research, will oversee the Bahamas operation as chief exec.

FTX to open new HQ in the Bahamas

FTX chief exec Sam Bankman-Fried’s plan is to hire Bahamian residents for roles in finance, marketing, and software development.

Billionaire Bankman-Fried wants to put “a comprehensive regulatory framework in place to help promote the growth of this nascent asset class,” according to a prepared statement.

FTX — backed by Bankman-Fried’s quantitative crypto trading firm Alameda Research — will now establish new headquarters in the Bahamas capital Nassau.

FTX’s flagship exchange is incorporated in Antigua and Barbuda and maintains headquarters in Hong Kong (more tax havens).

A similar subsidiary in Gibraltar with regulatory approval from the Gibraltar Financial Services Commission is expected.

On Twitter, Bankman-Fried boasted that Bahamas-based FTX Digital Markets will register as a Digital Asset Registered Exchange (DARE).

5) As governments all over the world look to regulate the cryptocurrency industry, I hope that The Bahamas and the DARE Act can serve as a guidepost.

We will continue building out, as we have been, under FTX Digital Markets.
— SBF (@SBF_FTX) September 20, 2021

The DARE Act is an update to Bahamian regulation that establishes a framework for digital asset businesses.

It addresses international standards for combatting money laundering and the funding of terrorism — historically sticking points for the region (although, watchdogs removed the Bahamas from money laundering monitoring lists in January).

In any case, FTX’s Bahamian venture comes on the heels of a $900-million capital raise in July.

At the time, FTX revealed plans for acquisitions and several new offerings, including a crypto payment processing app and non-fungible tokens.

FTX closer to crypto Tether than ever

It’s worth noting that the Bahamas chairs the Caribbean Financial Action Task Force (CFATF), an anti-money laundering organization akin to the US Treasury-led Financial Action Task Force.

Whether FTX’s relationship with Tether raises red flags within CFATF remains to be seen.

Last month, Protos revealed that FTX parent Alameda Research is one of Tether’s top-two customers, issuing more USDT than practically anyone else.

FTX also reports over $4 billion in daily USDT spot volume.