Bahrain Steps Up Cryptocurrency Push

The island nation of Bahrain may soon emerge as a global cryptocurrency exchange hub with the government enabling a ‘regulatory sandbox’ for the same. Khalid Saad, Chief Executive Officer of Bahrain Fintech Bay told BusinessLine, “As long as the business qualifies as a fintech (financial technology), we will welcome it. The focus is on developing the culture of entrepreneurship in Bahrain.”

“The decision to regulate, monetise or legitimise it as a legal tender will be subject to a decision of the regulator, that is the Central Bank of Bahrain.”

Commenting on the current position of the central bank on the legality of a Bitcoin like cryptocurrency, a Bahrain government official said, “As of now we recognise cryptocurrency as a commodity that can be traded in the exchanges. We are not considering it as a legal tender in any form.”

“There are seven entities that have entered the Regulatory SandBox, four of these are cryptocurrency exchanges. We will study the functioning of these exchanges and then define the rules that are needed to regulate them,” the official added.

According to an official statement, the recently launched Bahrain FinTech Bay is the largest fintech hub in the Middle East and North Africa (MENA) region. It is also Bahrain's first fintech hub. The Sandbox licence is a type of regulatory framework that is being adopted by central banks to allow fintech firms to showcase their technology through lighter capital and entry requirements.

BusinessLine reported in September last year that Bahrain would look at digital currencies and regulatory sandbox is the way this Gulf Cooperation Council member country would allow experimentation in a controlled environment.

In January this year, Malaysia-based cryptocurrency technology provider, Belfrics Global, was allowed by Bahrain’s Central Bank to open a cryptocurrency exchange under the regulatory sandbox. A company statement said this approval from the will provides access to a $50-billion digital transaction market in the MENA region alone.

(The reporter is in Bahrain on an invitation from the Economic Development Board (EDB) of Bahrain)