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Abu Dhabi, UAEMonday 17 December 2018

Bahraini cryptocurrency exchange eyes GCC launch in 2019

Rain operates under the Central Bank of Bahrain’s FinTech ‘sandbox’ for start-ups

The cryptocurrency industry has drawn criticism and concern amid high market volatility and lack of global regulation, but Bahrain-based start-up Rain wants to change that. Reuters
The cryptocurrency industry has drawn criticism and concern amid high market volatility and lack of global regulation, but Bahrain-based start-up Rain wants to change that. Reuters

Rain, a Bahraini cryptocurrency exchange backed by bitcoin developer Jimmy Song, aims to secure a full operational licence in 2019 to expand its operations in the GCC.

If successful, the company would be the first regulated digital currency exchange in the region. The oversight could provide comfort to investors wary of cryptocurrency trading, which has been been beset by lack of global regulation, recent high-profile heists of digital coins and market volatility.

“The biggest issue in this industry is that of trust,” Rain’s co-founders Yehia Badawy, Abdullah Almoaiqel, AJ Nelson and Joseph Dallago, said in a statement.

“We want our customers to feel safe when they are using our product and have taken measures to ensure this, including establishing two stable bank partnerships and incorporating banking grade security checks and verification into our product.”

Rain, whose digital platform and custodian services allow people to buy, sell and store digital currency in a secure environment, has operated a limited set of activities since November 2017 as part of the Central Bank of Bahrain’s FinTech sandbox trial, intended to support start-ups in the sector. Rain is in talks with authorities to win a full licence to scale up its operations next year.

FinTech has caught the attention of venture capitalists and other investors across the world, with billions pumped into start-ups and other companies in the sector.

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Read more:

Tougher rules needed on crypto trading, Abu Dhabi regulator says

UAE issues warning against initial coin offerings as cryptocurrencies plunge

ADGM and Bahrain EDB agree to collaborate on fintech

Bitcoin skids amid broad cryptocurrency sell-off

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Total global FinTech investment rose to $8.2 billion in the third quarter of 2017, compared with $6.3bn in the year-earlier period, according to KPMG’s latest Pulse of FinTech report.

GCC countries including Bahrain and the UAE want to increase their involvement in FinTech as they diversify their economies, and have introduced legal and regulatory reforms to support the fast-growing sector.

UAE financial free zone Abu Dhabi Global Market last year published guidance on virtual currencies and initial coin offerings – the digital currency version of public share listings – following high volatility in the trading prices of popular cryptocurrencies such as Bitcoin.

However, in an interview with The National last month, the chief executive of ADGM’s Financial Services Regulatory Authority said the industry needs more regulation to combat the risk of financial crime. “Every time a coin gets stolen or lost, it affects the confidence in this asset class,” Richard Teng said.

Rain’s investors include cryptocurrency players Breadwallet, Blockwater, JM Bullion, Capital Markets Trading and bitcoin developer Mr Son.

“We will provide the GCC with a digital currency exchange that meets the highest international standards in terms of pricing, product, security and regulation,” the founders said. The company’s online waiting list is published on Wednesday.