Bahrain Introduces Comprehensive Set of Cryptocurrency Regulations

The Central Bank of Bahrain has issued one of the most comprehensive set of cryptocurrency regulations in the Middle East, including rules on licensing, governance, and risk management for the new asset class.

According to a Feb. 25th report from Trade Arabia, the Central Bank of Bahrain has issued its final ruling on cryptocurrency assets.

"The 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."

The bank specified the need for enhanced due diligence when onboarding new clients.

The bank's biggest concern seems custodial in nature-with the new regulations focused on cryptocurrency wallets.

The Central Bank issued requirements to ensure that "Encrypted safe custody accounts," or more simply cryptocurrency wallets, are maintained in such a way that both retrievable and secure.

The ruling mandates that the crypto is covered by insurance to protect against incidents of hacking or theft, reports showed.

The country's plan to become the leader both in banking and crypto in the Middle East and North Africa faces tough competition.

Bahrain was once the undisputed banking center of the Gulf but is now fighting with the UAE, Saudi Arabia, and Qatar to regain its place by breaking through using the blockchain sector.

Earlier in January, Saudi Arabia and the United Arab Emirates launched a joint pilot cryptocurrency initiative to enable easier cross-border transactions.