Bahrain’s recently announced regulations governing cryptocurrency assets are a “comfort” to entrepreneurs and companies working in the sector, according to Dalal Buhejji, the senior manager of business development financial services at the Bahrain Economic Development Board.
Bahrain’s Central Bank said last week that it has issued “the final rules on a range of activities relevant to crypto assets” which cover areas including licensing and governance to security measures.
The announcement was followed days later by news that Rain – a Bahrain-based crypto exchange platform – graduated from the Central Bank’s regulatory sandbox and is in the process of applying for a relevant license.
Speaking on the sidelines of the recent Euromoney GCC Financial Forum in Manama, Buhejji said the regulations “are very comforting for entrepreneurs and the fintech companies.”
“They want to be recognised. They want to regulated,” she said. “To them that adds more confidence when it comes to the user base and more confidence with investors when they go and raise funds.”
“It’s a very positive message that’s been sent out,” Buhejji added. “A lot of people who use cryptocurrencies will feel more comfortable knowing that they are regulated in Bahrain.”
Growing fast
While Rain is so far the only cryptocurrency-related firm to graduate from the regulatory sandbox – and one of only two overall – Buhejji said that “a big percentage” of the firms currently in the programme are involved in the sector.
“It’s been very successful,” she said. “It’s growing quite fast and the regulator is taking it seriously, to understand how best to accommodate for it … we like to acknowledge new innovation and we are willing to understand this field. It’s going to be a learning experience.”
Among the regulations included in the crypto asset framework are rules governing pre and post trade transparency and measures to avoid market manipulation or abuse and conflicts of interest.
Additionally, the rules call for enhanced due diligence when on boarding new clients, education for clients giving clear instructions for the use of their asset wallets, and steps to ensure that no wallets are maintained that later on cannot be retrieved.
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