Central Bank of Bahrain strengthening crypto-assets market

By introducing enhanced regulatory framework for digital tokens
Central Bank of Bahrain strengthening crypto-assets market
Bahrain's Central Bank issues regulations for digital tokens

The Central Bank of Bahrain (CBB) made changes to its Crypto-assets Module in March 2023, after consulting with industry experts.

The amendments were made to accommodate the ever-evolving crypto-assets market and align with industry best practices while also improving investor protection.

This move is part of the Central Bank’s plan to expand the crypto-assets market in line with the Kingdom’s Economic Recovery Plan.

The Central Bank of Bahrain has expanded the scope of its regulated crypto-assets activities to include “Digital Token Offerings” under the new amendments. As a result, any digital token offerings with security-like characteristics will be regulated by the bank.

Read more: First hotel in Bahrain to accept crypto payments

CBB will examine a digital token’s underlying economic purpose, structure, characteristics, and associated rights to determine whether it is a security.

The amendments also include new requirements to improve the security of client assets, providing investors with additional safeguards.

Furthermore, the new amendments allow crypto-asset licensees to engage in additional activities that are not covered by the regulated crypto-asset services after obtaining Central Bank approval.

CBB has successfully implemented the crypto-asset module in 2019 under Volume 6 of the CBB Rulebook, providing potential CAX platforms with all the necessary regulations to set up and run their operations in Bahrain.

The activities confirmed by the CBB that constitute regulated Crypto-Asset services include:

  • The reception and transmission of an order to trade and execute accepted Crypto-Assets.
  • The dealing on one’s own account.
  • Portfolio management.
  • Safeguarding, storing, holding, and maintaining custody of clients for accepted Crypto-Assets.
  • Offering investment advice.

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