Thursday, May 23, 2024
Editor's PickBahrain releases new regulatory framework for digital tokens

Bahrain releases new regulatory framework for digital tokens

The Central Bank of Bahrain (CBB) has has amended its digital assets framework, following a consultation process with industry stakeholders, to include virtual token offerings.

The amendments to its Crypto-assets module aim to cater to the ongoing developments in the crypto-asset markets and comply with industry best practices while enhancing investors’ protection, as part of the CBB’s plan to further develop the crypto-asset market in line with the Kingdom’s Economic Recovery Plan.

With the new amendments, the CBB expanded the scope to comprise digital token offerings as part of its framework for regulated crypto-asset activities. Accordingly, all offers of digital tokens that exhibit the characteristics of security will be regulated by the CBB.

The CBB said it will examine the underlying economic purpose of a digital token, its structure, characteristics as well as rights attached to the virtual token to determine whether the token qualifies as a security.

It is also worth noting that the amended framework outlines new requirements to investor protection, and allows crypto-assets licensees to engage in additional activities, outside the stipulated regulated crypto-asset services, with the permission of the CBB.

“The CBB has adopted a risk-based regulatory approach toward requirements, which are proportionate and commensurate to the regulated activity undertaken by a licensee. We endeavor to provide adequate safeguards to investors without inhibiting innovation adoption at the CBB, as we continue to monitor market trends and review the regulatory framework to keep up with the latest developments in the field, as well as maintain the competitiveness of the sector,” said Abeer Al Saad, the director of the Capital Markets Supervision Directorate at the CBB.

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