The Impact of Bahrain Cryptocurrency Regulation on the Digital Asset Industry

• Bahrain is considered one of the most open economies in the Middle East and North Africa. Moreover, the diverse economy includes some key industries such as banking and financial services, heavy industries, retail, and tourism, which generates many opportunities for an individual willing to run a business in Bahrain. One of the best business opportunities is for the traders of cryptocurrency which includes the obtainment of a Bahrain crypto asset service provider License which smoothens the process. 

• However, a strategically located country that serves as an ideal point between the Middle East, with easy access to regional and international markets makes it strategically important and an attractive location for many businesses. Further, combining the location of the country with the open and transparent business environment for businesses makes it more appealing to individuals for Bahrain company registration. To register company in Bahrain you will engage with several free trade agreements, excellent infrastructure, and solid financial institutions and are subject to various regulations such as Bahrian cryptocurrency regulation.

• Moreover, Bahrain has been actively pursuing the development of cryptocurrency in the country by implementing various regulations based on international best practices, and much of its crypto regime is modelled on European directives, particularly regarding money laundering. The Central Bank of Bahrain announced a legislative framework in 2019 to oversee and manage the crypto asset in Bahrain. Subsequently, in March 2022, CBB granted Binance which was one of the biggest crypto exchange platforms the license which was one of its kind in the Gulf Cooperation Council. 

• Overall, Bahrain's regulatory framework on cryptocurrency servicing in the Kingdom permits foreign entities to apply for a license within Bahrain and operate as an 'Overseas crypto asset service licensee' but, applying for these licenses and obtaining these licenses from the authorities might trouble you because of the documentations and complexities involved. Thus, Tetra Consultants can help you with their years of experience and qualified team, we can help you in obtaining offshore financial licenses and comply with Bahrain Cryptocurrency regulations. 

Bahrain cryptocurrency regulation 

There are many regulations that a company needs to comply with. Tetra Consultants can guide you through all the regulations which you are subjected to according to the business structure and services you apply for.   There are various regulations for operating a cryptocurrency business in Bahrain which are as follows: 

• The Central Bank of Bahrain has been providing comprehensive regulations to oversee and manage the ‘Regulated crypto-asset services’ in Bahrain with a view to becoming the region’s premier FinTech centre.  
• In March 2023, the Central Bank of Bahrain issued the amendments regarding the crypto-assets following a consultation process with the industry stakeholders, to cater to the ongoing developments in the crypto-assets markets and comply with the industry's best practices while enhancing investors’ protection. 
• Further, the amendment also outlines the requirements for safeguarding the client’s assets to provide a higher level of protection to the investor.  
• The regulatory framework also permits the crypto-assets licensee to be engaged in additional services that are not within the stipulated regulated crypto-asset services.  
• The Central Bank of Bahrain regulatory framework also permits foreign entities already operating in other countries to apply for a cryptocurrency license with Bahrain and can operate in the country as an ‘overseas crypto asset service licensee’ after complying with the requirements of Bahrain company registration.  

Impact of Bahrain’s Cryptocurrency Regulation on the Digital Asset Industry 

Bahrain’s cryptocurrency regulation has a significant impact on the Digital Assets Industry in the country and the wider region. The impacts are as follows:  

Development of a well-regulated ecosystem 

• Bahrain has been able to position itself to create a safe and well-regulated cryptocurrency ecosystem. The CBB has been implementing various rules and laws regarding the governing and licensing of ‘Regulated crypto-asset services’ in the country which aims at minimising the risk of financial crime and illegal use of crypto-assets.  
• With well-developed and regulated ecosystem, you can rely on Tetra Consultants for corporate bank account opening in the preferred bank.  

Attracting global cryptocurrency exchanges 

• By attracting many cryptocurrency exchanges through the Bahrain cryptocurrency framework, many crypto exchanges are attracted to setting up their exchanges in Bahrain. In March 2022, Binance became the world's biggest cryptocurrency exchange and was granted a crypto-asset service provider license by the CBB, which was one of its kind in the Gulf Cooperation Council (GCC).  
• By granting such licenses, Bahrain cryptocurrency regulation has been able to provide development to the crypto sector and also provide a supportive environment for crypto businesses in Bahrain.  
• There are many Bahrain cryptocurrency regulations which attracted foreign entities. To know more about the Bahrain cryptocurrency regulations Tetra Consultants can provide you with the whole details of the rules for offshore company incorporation and for obtaining offshore financial license which will be beneficial for the businesses.  

Licensing for overseas entities 

• Bahrain cryptocurrency regulations have allowed foreign entities to obtain licenses for operating crypto exchanges in Bahrain. After a foreign entity has completed the Bahrain company registration process, allows foreign entities operating in other countries or states to apply for a license within Bahrain and operate as an 'Overseas crypto-asset service licensee'.  
• This has also contributed to the growth of the digital asset industry in the country by attracting many established entities from all around the world. Tetra Consultants have been providing services regarding the Bahrain Crypto Asset Service Provider License and offshore financial licenses for foreign entities willing to operate a Bahrain company.  

Enhanced investor protection 

• The CBB regulatory framework has included various requirements for improving and safeguarding the client’s assets and also providing a higher degree of protection.  
• These rules emphasise investor protection which helps in building trust in the cryptocurrency industry and also encourages more individuals and institutions to practice in the market. The enhanced protection induces the growth of the digital asset industry in Bahrain.  

Challenges with Global Regulatory Compliances 

• Bahrain's cryptocurrency regulation has been an attractive regulation policy for many investors and entrepreneurs willing to operate crypto exchanges. The regulation not only attracted businesses but also promoted a well-regulated ecosystem in the country.  
• However, there are some challenges which persist in the regulation. Tetra Consultants with their regulatory compliance consulting services can provide you information regarding financial regulations.   

Conclusion 

• As the CBB has promulgated regulatory rules in the form of a directive governing crypto assets. The regulations mentioned by the CBB’s directive cover licensing requirements, safeguarding rules, technology standards, and reporting, notification, and approval requirements which attract many investors and businesses. 
• The Central Bank of Bahrain (“CBB”) successfully implemented the crypto-asset module in 2019 under Volume 6 of the CBB Rulebook, providing potential Computer-aided technologies (CAx) platforms with all the necessary regulations to set up and run their operations in Bahrain. 
• Tetra Consultants can provide you with a seamless journey to obtain ‘A Bahrain Crypto Asset Service Provider License’ and can also assist with Bahrain company registration for better opportunities for businesses and entrepreneurs. If you require any further services, Tetra Consultants can provide you services regarding the nominee director and shareholder services to its clients. 
• Contact us to find out more about Bahrain’s cryptocurrency regulations and their impact on the digital asset industry. Our team of experts will revert within the next 24 hours.