- Kingdom was early crypto adopter
- ‘Forward looking’ approach
- BitOasis exchange launches this year
Bahrain will not sacrifice its position as a trusted financial centre as it chases cryptocurrency millions, according to the boss of fintech incubator Bahrain FinTech Bay.
Earlier this month the kingdom’s central bank gave BitOasis Bahrain, a regional crypto trading platform, a so-called Category 2 crypto-asset services licence.
The regulatory approval means that the broker-dealer platform can go live in the second half of this year.
“We need to be extra cautious, but at the same time, also be opportunistic and forward looking with our approaches, given the competition there is in the region,” said Bader Sater, CEO of Bahrain FinTech Bay, which describes itself as the largest fintech hub in the Middle East.
“We’re hoping that we will have at least a couple of other exchanges operating in Bahrain so that we get more diversity in terms of the providers that are here,” Sater said.
In contrast to some other Gulf states, notably Kuwait and Oman, Bahrain has sought to position itself as an early adopter of crypto banking regulation and has pushed itself as a market leader.
In 2019 the Central Bank of Bahrain (CBB) announced a legislative framework to oversee and manage crypto assets in the kingdom.
The GCC was the fastest growing market for virtual assets in 2021-2022 with a total value of $566 billion received, according to Chainalysis, a data provider. The region continued to attract virtual assets in 2022-2023, receiving a total of $390 billion despite difficult market conditions.
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Seven years ago Rain Financial became the first crypto exchange to join a regulatory sandbox in Bahrain. In 2019 it became the first company to receive a license to operate as a crypto-asset service provider in the kingdom.
In March 2022 the CBB licenced Binance, which was one of the biggest crypto exchange platforms internationally.
Since then Bahrain has given licences to operators including CoinMena and most recently BitOasis.
However, cryptocurrency has been mired in controversy in recent years.
In April a US court sentenced Changpeng Zhao, Binance’s billionaire founder, to four months in prison after he pleaded guilty to charges of enabling money laundering.
The US Department of the Treasury said Binance had failed to report more than 100,000 suspicious transactions to law enforcement.
In 2022 Sam Bankman-Fried received a 25-year prison sentence for frauds relating to his crypto trading platform FTX.
“I think that what’s been happening in the crypto market has actually pushed people towards regulated jurisdictions more than ever,” Sater said.
Bahrain is among a handful of countries in the region exploring the potential of central bank digital currencies.
“The Central Bank’s commitment and leadership in regulating our industry allows businesses like BitOasis to launch cutting-edge products in an industry characterised by rapidly and dynamically evolving technology,” said Ola Doudin, co-founder and CEO of BitOasis.