The Capital Market Authority (CMA) of Oman has given its greenlight to amend the capital market legislation to authorize crowdfunding platforms in the Sultanate as an alternative means to fund MSMEs.
The move comes as the Omani government is working on supporting SMEs and micro projects as well as encouraging youth entrepreneurship amid less-than-favorable SME banking finance performance. The CMA attributes the banking sector’s reluctance to fund such projects to related risks and lack of proper guarantees, compounded further by risks inherent in a global pandemic, financial crisis and liquidity crunch.
“It is worth to note that crowdfunding platform regulations are in their final stages of preparation and the CMA will take into consideration, in setting out the rules, that they will not be transformed into lending institutions in the conventional sense and will post them for consultation and feedback from the public,” the CMA noted.
The first crowdfunding platform is expected to be licensed before the end of the year. Once finalized and approved, Oman will join regional peers such as the UAE, Bahrain and Saudi Arabia to formally regulate this fintech vertical. Like its neighbors, it is highly likely that the regulator — a strong advocate of Islamic finance — will also consider Shariah uniqueness in the design of the upcoming rules.