The Central Bank of Bahrain (CBB) has issued new regulation regarding cryptocurrencies, including licensing, governance, capital, control environment and risk management. According to a February 25 report from Trade Arabia, the CBB rules are aimed at ensuring that the related activities are brought within the regulatory perimeter and are subject to comprehensive regulatory and supervisory measures.
Khalid Hamad, executive director of banking supervision at the central bank, said that the country will continue to enhance its regulatory framework to keep pace with the innovations taking place in the major financial centers around the globe.
“The CBB’s introduction of the rules relating to crypto-assets is in line with its goal to develop comprehensive rules for the FinTech eco-system supporting Bahrain’s position as a leading financial hub in the Mena region,” he added.
The Central Bank has introduced regulations that establish rules for licensing, governance, minimum capital, control environment, risk management, AML/CFT, standards of business conduct, avoidance of conflicts of interest, reporting, and cyber security for crypto-asset services. The rules also cover various supervision and enforcement standards.
The bank specified the need for enhanced due diligence when on-boarding new clients. However, the bank’s biggest concern seems to have been custodial in nature – the main focus of the new regulation were cryptocurrency wallets. Requirements to ensure that no encrypted safe custody accounts or “wallets” are maintained that cannot be retrieved have been introduced, as well as a mandate that ensures keyman risks are covered by insurance, reports showed.