Bahrain's central bank has issued draft rules on the trade in cryptocurrencies for consultation, setting up a framework to regulate virtual currencies as GCC countries look to increasingly tap into such assets.
The new regulatory framework covers the requirements for licensing, financial resources, and measures to safeguard client or customer interests, technology standards and in particular the cyber security risk management measures, reporting and other requirements.
"This regulatory framework will address the demand from the market for these services and the need to also recognise this innovation in financial services. The CBB's experience with the participants within the Regulatory Sandbox was insightful in shaping these rules," Khalid Hamad, the executive director of banking supervision, said.
Bahrain has identified fintech as a way to try to revive its credentials as a regional banking and business centre and has already launched a regulatory sandbox to allow firms to test and develop their products in a virtual space, as Reuters reports.
The Bahrain FinTech Bay, inaugurated in February, is home to about 30 firms working on cryptocurrencies, blockchain, digital payments and other financial technology. Abu Dhabi and Dubai are investing to boost the growth of FinTech start-ups. The number of MENA startups is expected to more than double by 2020 from 2015, according to Wamda Research Lab.