Central Bank of Bahrain finalises rules on cryptocurrencies
New regulatory framework follows publication of draft rules in December
The Central Bank of Bahrain published its final set of rules to regulate trading and other activities involving digital currencies, as they grow in popularity across the region and beyond.
“We will continue to enhance our regulatory framework in order to keep pace with the innovations taking place in the major financial centres around the globe,” said Khalid Hamad, executive director of banking supervision, at the central bank, on Monday.
“The CBB’s introduction of rules relating to crypto assets is in line with its goal to develop a comprehensive framework for the FinTech eco-system supporting Bahrain’s position as a leading financial hub in the Middle East and North Africa region.”
Bahrain’s FinTech Bay, inaugurated last February, is home to more than 30 companies working to develop cryptocurrencies, blockchain, digital payments and other financial technologies. Neighbouring Arabian Gulf states including Abu Dhabi and Dubai are also investing to boost the growth of FinTech start-ups.
Last year, Abu Dhabi Global Market, the emirate's international financial hub, was the first to launch a framework to regulate spot crypto asset activities, a step towards developing a safer marketplace for digital currencies in the capital. The regulations to govern the digital assets will oversee activities undertaken by exchanges, custodians and other intermediaries, ADGM said last year.
Meanwhile, the Dubai International Financial Centre’s FinTech Hive, whose startups managed to raise over $10 million in funding in 2017, is aiming to introduce more programmes while adding new innovations in the region’s banking sector.
Earlier this month, Saudi Arabia’s banking regulator said it had started designing a sandbox regulatory environment, in line with its economic transformation.
The move will help the Saudi Arabian Monetary Authority understand and assess the impact of new technologies on the financial services market.
The new CBB rules intend to govern transactions taking place in Bahrain involving virtual currencies such as Bitcoin, and other "crypto assets" operating via the blockchain distributed ledger system and other technologies.
The CBB’s rules “are aimed at ensuring that related activities are brought within the regulatory perimeter and are subject to comprehensive regulatory and supervisory measures”, the statement added.
Bahrain published draft rules to regulate cryptocurrencies in December. The final framework covers requirements for licensing, governance, cyber security standards, anti-money laundering and other risk management measures, as well as avoidance of conflicts of interest, financial reporting and minimum capital required by cryptocurrency firms, the CBB statement said.
They also cover the supervision and enforcement standards for all parties involved in transactions, including custodians, portfolio managers, principals and agents.
Updated: February 25, 2019 05:11 PM