The Capital Market Authority (CMA) of Oman is gathering feedback on a consultation paper for its Virtual Assets Regulatory Framework as it prepares to license virtual asset service providers (VASPs) and regulate crypto activities.
The CMA expects to to cover all virtual assets activities, a licensing framework for all VASP categories and a supervisory framework to identify, assess and mitigate ongoing risks in the proposed regulatory framework.
To inform the design of the upcoming policy, the CMA is working on conducting a global analysis and benchmarking with other jurisdictions.
IFN Fintech broke the news about the CMA working on crypto assets regulations last October. It was in November 2020 that the National Committee for Combating Money Laundering and Terrorist Financing set up a task force comprising representatives from the CMA and Central Bank of Oman to study and weigh in on permitting or prohibiting the use of virtual assets in the Sultanate.
In February, the CMA appointed international digital assets specialist XReg Consulting and local legal firm Said Al-Shahry and Partners to advise and assist it in formulating the policies.
According to the consultation paper as viewed by IFN Fintech, the framework will cover utility tokens, security tokens, and stable coins – both fiat-backed and asset-backed.
The policy also covers other types of digital currencies that do not fall under the abovementioned categories but still fulfil the Financial Action Task Force’s broad definition of a virtual asset: a digital representation of value that can be digitally traded or transferred and can be used for payment or investment purposes.
Notably, the CMA intends to ban the issuance and use of anonymity-enhanced cryptocurrencies, or more commonly known as privacy coins.
“Privacy coins are virtual assets that allow for reduced transparency and increased obfuscation of financial flows and have been linked to illicit activities such as money laundering and organized crimes. The CMA will require that VASPs are able to trace all virtual assets transactions, mitigating the risk of virtual assets being used for illicit activity,” the regulator noted.
Private coin activities include the use of tumblers, mixers, privacy-enhanced wallets and other technologies that obscure the identity of the sender, recipient, holder or beneficial owner of a virtual asset.
The CMA has also proposed to include a minimum capital requirement on licensees. It may also consider prescribing an additional risk-based buffer for VASPs.
Market stakeholders have until the 17th August 2023 to submit their feedback to the CMA on the draft framework.