Since the launch of Bitcoin in 2008, many altcoins have emerged. So far, the cryptocurrency industry has significantly expanded. The global crypto market cap is currently pegged at $1.2 trillion, with the potential for significant growth. This figure shows that the crypto market is now a formidable industry across the globe.
Unsurprisingly, many countries have begun to realize crypto’s potential. For instance, countries like El Salvador have made Bitcoin a legal tender. Other countries have also announced plans to establish a Central Bank Digital Currency (CBDC), which is similar to crypto assets. The Middle East’s crypto industry has grown significantly in recent years. According to a Chainalysis report, the Middle East and North Africa is the fastest-growing crypto market.
This increasing adoption rate has placed cryptocurrencies at the center of the attention of many Middle Eastern governments. Bahrain is one of such governments. In recent years, Bahrain has demonstrated its position as a crypto hub. Earlier this year, the world’s largest crypto exchange, Binance, launched in Bahrain. Upon its launch, Binance described Bahrain as a significant business hub that will expectedly aid the company’s growth. Binance was also the first company to secure a license for crypto-asset service provision in Bahrain. This occurred in mid-2022.
Crypto Regulations in Bahrain
Bahrain’s crypto industry has primarily thrived due to the Kingdom’s comprehensive regulatory framework. Over the years, Bahrain has been intentional about perfecting its crypto regulations. This intentionality has been effective, as the kingdom has successfully maintained one of the world’s most respected crypto regulatory environments. In 2019, Bahrain’s Central Bank launched a regulation to oversee and regulate crypto asset services.
These rules provide guidance on how Bahrain intends to govern areas like risk management, KYC, and cybersecurity. The rules also cover services provided by agents, portfolio managers, and financial advisers.
Apart from specialized services, the CBB’s rules stipulate the guidelines for licensing. The CBB mandates that companies seeking to provide crypto services in Bahrain must be duly licensed. This licensing procedure is divided into four sections. It covers investment advice, crypto trading and custody, portfolio management, and crypto asset exchange.
Lastly, Bahrain also has clear rules on assets that qualify as “accepted crypto assets”. A licensee must have mentioned these assets at the point of registration. This means that a licensee cannot deal with a crypto asset that was not previously highlighted to the CBB. It is also important to note that the CBB has expectations on due diligence. Thus, if a licensee intends to add another crypto asset to its service offerings, it must convince the CBB that it has verified the authenticity of the project. This is to ensure that investors are duly protected.
Conclusion
Bahrain has an effective regulatory framework designed to help crypto companies thrive within the kingdom. As crypto adoption continues to increase, Bahrain will likely be able to distinguish itself as an attractive location for multinational crypto companies.
