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Galaxy Bahamas Ltd. will physically operate from the Bahamas and initially serve as an extension of the company’s trading platform.
Galaxy Digital Holdings Ltd (Toronto: GLXY) has been pushing boundaries to help onboard worldwide institutional investors into the cryptocurrency market. The crypto-focused company with over $2 billion in assets under management (AUM) takes pride in over 880 unique institutional investors. Furthermore, Galaxy Digital Holdings under chief executive officer Mike Novogratz has several business lines including crypto trading, asset management, investment banking, and crypto mining, among others.
Galaxy Digital is regulated in several jurisdictions including 25 states in America, and Canada among others. The company has been pushing its business to get global regulatory approval to expand its operations exponentially. Moreover, the fall of Terra Luna UST and the FTX crypto exchange, which resulted in a loss of over $70 billion, has awakened global regulators’ attention to the digital asset economy.
Galaxy Digital in the Bahamas
In a bid to ensure future growth sustainability, Galaxy Digital ostensibly received regulatory approval from the Securities Commission of The Bahamas in December for registration as a digital asset business under its Digital Assets and Registered Exchanges Act of 2020. Reportedly, Galaxy Bahamas Ltd. will physically operate from the Bahamas and initially serve as an extension of the company’s trading platform. Additionally, Galaxy Bahamas will offer market-making and staking services to institutional investors seeking to get crypto exposure
Notably, cryptocurrency staking has already been subjected to regulatory scrutiny in the U.S. after the SEC charged the Kraken crypto exchange with selling unregistered securities through its staking program. With Binance USD (BUSD) already clumped by the United States government, crypto companies in the country are looking for ways to get registered in digital assets’ friendlier nations.
For instance, the United Arabs Emirates, and El Salvador have received a tremendous increase in foreign crypto investments due to their welcoming regulations.
“Wherever Galaxy operates, our governance controls and risk-management practices always apply,” said Mike Wursthorn, head of communications at Galaxy Digital. “Our operations in the Bahamas are no different. We perform due diligence on customers and counterparties in all jurisdictions and disclose audited financial statements, so customers and shareholders have full transparency into our business.”
However, the crypto operations in the Bahamas may be regarded as risky following the FTX and Alameda fallout. Furthermore, the case has left hundreds of institutional investors including government agencies with billions of dollars in losses.
“In light of the FTX dispute, customers, counterparties and regulators may view operations within the Bahamian crypto economy as riskier than operations in other jurisdictions,” the firm said in a February filing.
The crypto market is, however, more resilient than before with Bitcoin trading above pre-FTX levels. Nonetheless, the fear of a global recession and increased regulatory scrutiny may push crypto prices down before the end of 2023.