The Central Bank of Bahrain has issued amendments to its Crypto-assets (CRA) Module expanding their scope to comprise ‘Digital Token Offerings’ as part of its framework for regulated crypto-assets.
The amendments aim to cater to the ongoing developments in the crypto-assets markets and comply with the industry best practices while enhancing investors’ protection, as part of the CBB’s plan to further develop the crypto-assets market in line with the kingdom’s Economic Recovery Plan.
Accordingly, all offers of digital tokens that exhibit the characteristics of security will be regulated by the CBB. In determining whether a digital token qualifies as a security, the CBB will examine the underlying economic purpose of the digital token, its structure, characteristics, as well as the rights attached to the digital token.
Protection for investors
The amendments also outline new requirements to enhance safeguarding clients’ assets to provide high levels of protection for investors. Furthermore, the new amendments allow crypto-assets licensees (after obtaining the CBB’s approval) to engage in additional activities, which are not within the stipulated regulated crypto-asset services.
Director of the Capital Markets Supervision Directorate, Abeer Al Saad, said: “We have issued new amendments to our regulatory framework for crypto-assets. They specifically introduce new regulatory requirements for the digital token offerings in order to regulate the crypto-assets market in a fair and transparent manner.
“Therefore, the CBB has adopted a risk-based regulatory approach towards requirements, which are proportionate and commensurate to the regulated activity undertaken by a licensee. We endeavour to provide adequate safeguards to investors without inhibiting innovation adoption at the CBB, as we continue to monitor market trends and review the regulatory framework to keep up with the latest developments in the field, as well as maintain the competitiveness of the sector. This milestone is a reflection of the pioneering role the CBB continues to play in regulating crypto-assets.
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