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Central Bank of Bahrain issues proposal for regulation of digital assets

Alan Muli

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The Central Bank of Bahrain has prepared some draft rules to facilitate the regulation of digital assets and other aspects of the country’s crypto industry. The purpose of the move is to try and improve Bahrain’s Fintech sector dominance as well as reestablish its role as a major banking hub in the Persian Gulf.

Role of a regulatory body

The proposed regulations are pending consultation and approval. The bank remarked that the consultation process would be complete by the 31st of December 2018 and that feedback would be provided before then. The proposals have been published on the bank’s website.

The proposal aims to come up with a licensing regime for cryptocurrency trading platforms. It also aims to devise a supervisory mechanism for crypto assets providers in the country. The draft addresses the need to introduce measures that secure the interests of consumers. Cybersecurity risks are an area of concern as well, and the draft paper also contains technology standards to help deal with such problems arising in the nascent industry.

The executive director of the central bank of Bahrain, Khalid Hamad, remarked, “This regulatory framework will address the demand from the market for these services and the need to recognize this financial innovation.” He went on further to explain how working with people in Bahrain’s regulatory sandbox would be of help in coming up with the rules.

Improving the financial sector

The primary goal for launching a regulatory framework is to develop the Fintech industry and increase the number of companies that offer cryptocurrency related services. Digital asset investment will also minimize government expenditure that is to be used in implementing new financial technology.

Bahrain Fintech Bay was set up in February 2018. It has since increased its services to 30 companies dealing with crypto assets. The cryptocurrency regulation drive will help restore the country’s position as a regional banking and business hub.

Once passed into law, the crypto regulations will massively boost the financial sector in Bahrain especially the digital assets industry.

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