Digital currency exchange Rain is aiming to become the first licensed cryptocurrency exchange in the Gulf Cooperation Council after graduating from Bahrain’s fintech sandbox.

The exchange’s founders have been in discussions for two years to try to achieve a stable legal framework for digital currency traders, and opened a waiting list for potential traders on Wednesday, stating that they hope to achieve a full licence to operate early next year.

Yehia Badawy, one of a team of four founders, says Rain is the furthest ahead of any exchange in the region in terms of achieving a full licence, which it hopes will be in place by 2019, having served a limited number of customers in the GCC and North Africa under a sandbox licence.

Speaking to Zawya in a phone interview on Tuesday, Badawy said that while the company achieved the first stage towards licensing in the Central Bank of Bahrain sandbox in September 2017, it was open to other options, including listing through Abu Dhabi Global Markets, which launched a crypto asset regulatory framework for the MENA region in June.

“As a company we believe in redundancy, when it comes to regulatory redundancy or any part of our business, we always want to talk to as many people as possible. So when it comes to the Abu Dhabi Global Markets (ADGM) we have already spoken with them quite a few times since they came out with the regulations.

“The Central Bank of Bahrain has come up with the sandbox licence almost a year ago, so we are in quite an advanced conversations with the Central Bank of Bahrain, but we have initiated contact and are developing conversations with the ADGM as well,” he said.

Badawy emphasised the amount of work that the company has already done behind the scenes to avoid potential issues related to the region’s digital currency market, for example, when Emirates NBD halted transfers from customers dealing with blockchain-based platforms in January.

“We believe in our core principals of security and trust,” he said.

“We have initiated conversations with the different regulatory bodies in the region as far back as two years ago, knowing full well that it only starts with the regulation, as, if you start anywhere else, you have a high risk of not really having a smooth journey, and our mission is to bring institutional-grade infrastructure for digital currencies to the Middle East that will last for decades.

“The only sustainable way to do that is to talk to the regulators first.”

Responding to reports on some cryptocurrency blogs, which suggested as recently as August that crypto trading is currently illegal in Saudi Arabia, he said:

“We have actually initiated conversations with the regulators there, we have meetings scheduled with them as well. We understand that it takes a long time to get things moving. We have had this idea in mind for two years now. We have spoken to different regulators in the region, including in other countries here, and now we feel the tone has changed and they are more willing to listen.”

Badawy acknowledged that an issue with the crypto currency industry was that it had been associated with illegitimate business activities, but stressed that it was part of Rain’s mission to counterbalance that.

“Unfortunately the crypto currency industry has become rife with a lot of scams and illegitimate businesses masking their activities under crypto currencies. Crypto currencies aren’t to blame for this, but unfortunately these bad actors are tarnishing this technology and the reputation it has.

“It is our duty to counterbalance that by educating all the ecosystem, whether it’s regulators and partners, individuals through our meetups, and really explaining the benefits and we will continue to do that.

“We have faith in the region that things will only continue to develop for us.”

As to the question of whether a region in which cheque payments are still commonplace in certain scenarios, for example rent payments in the United Arab Emirates, is really ready to embrace crypto currency, he said: “As someone who started to use cryptocurrency in 2011, having to pay cash for things still today in 2018, there is this disconnect, but I would say having travelled to various parts of the world, to the U.S. and Europe, I still have seen this disconnect everywhere.

“Some regions have adapted more than others,” he said.

For example in China, he said, WeChat payments are prevalent, while credit and debit card payments were a step that had effectively been missed out.

He added: “There needs to be an infrastructure that is an on-ramp that allows people to transact using this technology.

“Once the infrastructure is there, more people will be able to transact, they will trust it, trust it’s legitimate, trust that their funds are held securely and it’s OK to use this technology, and once they start using it, they will find out how much easier and cheaper and faster it is to utilise it to transact.”

(Reporting by Imogen Lillywhite; Editing by Shane McGinley)
(shane.mcginley@refinitiv.com)

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© ZAWYA 2018