Bahrain's Bitcoin Laws: What You Need To Know

Bitcoin is legal in Bahrain, and the country is considered one of the most crypto-friendly in the Middle East. The Central Bank of Bahrain (CBB) has issued regulations governing crypto-asset services, including licensing requirements, capital requirements, and cybersecurity standards. These regulations aim to minimise the risk of financial crime and the illegal use of crypto-assets. Crypto exchanges such as Rain and BitOasis are licensed by the CBB, and Bahrain has approved a partnership between EasyPay and Binance to facilitate cryptocurrency payments. However, consumers are warned against dealing with unlicensed institutions, such as the fraudulent entity bahrain.bitcoin, which claimed to be a licensed trading platform.

Bahrain's Central Bank has approved new cryptocurrency regulations

Bahrain is a global banking hub and has been taking steps to become a leading FinTech hub in its region. In line with this goal, the Bahrain Central Bank has approved new cryptocurrency regulations.

The new regulations cover many aspects of cryptocurrencies, from licensing to control of the authorities. Cryptocurrency exchanges will now have to obtain licenses to continue their activities and will need to ensure they do not intend to manipulate the market or breach conflict of interest in any way. The primary purpose of the regulation is to secure and enforce compliance among the critical organizations in the country.

The new rules, included in Volume 6 of the CBB Rulebook, cover licensing requirements, the conditions for the issuance and holding of the CBB license, minimum capital requirements, measures to safeguard client or customer interests, technology standards, and cyber security risk management requirements, reporting, notifications, and approval requirements.

The Central Bank of Bahrain has also issued licenses to several Sharia-compliant cryptocurrency exchanges, such as CoinMENA, which facilitate the deposit, trade, and withdrawal of digital assets in the users' local currency.

Bahrain's crypto-friendly attitude and new regulations have made buying and selling Bitcoin in the country easy.

Crypto-asset services must be licensed by the Central Bank of Bahrain

In its efforts to become the region's leading FinTech hub, the Central Bank of Bahrain (CBB) has introduced new regulations for crypto-asset services, requiring them to be licensed. This move is in line with the country's goal to diversify its economy beyond oil and establish itself as a global banking hub.

The CBB has issued comprehensive regulations, included in Volume 6 of the CBB Rulebook, to govern and license "Regulated Crypto-Asset Services" in Bahrain. These regulations cover licensing and supervision, with the aim of minimising the risk of financial crime and the illegal use of crypto-assets. Crypto-asset services that require licensing include trading, dealing, advisory, and portfolio management services.

To obtain a license, applicants must meet specific requirements, including submitting a business plan, application forms for shareholders and subsidiaries, and forms for "controlled functions" such as Chief Executive or General Manager. There is also a non-refundable application fee of BHD 100, and licensees must bear an annual license fee ranging from BHD 2,000 to BHD 6,000, depending on the operating scale.

The CBB has warned consumers against dealing with unlicensed entities, such as the fraudulent institution "bahrain.bitcoin," which claimed to be a licensed cryptocurrency trading platform. To protect consumers, the CBB encourages individuals to verify the authenticity of financial institutions on its website before investing.

The introduction of these regulations makes Bahrain an attractive destination for fintech firms dealing in crypto-assets, providing a regulatory framework that ensures the security and protection of investors in this emerging market.

The Bahrain-based CoinMENA exchange is Sharia-compliant

CoinMENA's Sharia compliance means that it has been designed to follow Islamic Shariah requirements. This includes avoiding activities involving gambling (maysir), interest (riba), and uncertainty (gharar). Any activity related to one or more of these concepts is forbidden under Islamic law.

Sharia-compliant cryptocurrencies aim to address the limitations of Bitcoin in terms of Shariah principles. For example, cryptocurrencies that are compliant must be regulated by an authority and backed by assets such as gold, oil, or silver. This is to protect people's wealth and ensure stability.

At launch, CoinMENA's platform and services will be available to residents of Bahrain, the UAE, Saudi Arabia, Kuwait, and Oman. The exchange will offer five major cryptocurrencies: Bitcoin (BTC), Ethereum (ETH), Ripple (XRP), Litecoin (LTC), and Bitcoin Cash (BCH).

CoinMENA's founder, Dina Sam'an, stated that the license from the CBB allows them to operate under a robust and globally-renowned digital assets regulatory framework, where governance, security, and customer protection are central to all operations.

The CBB has warned consumers about unlicensed institutions

The Central Bank of Bahrain (CBB) has warned consumers against dealing with unlicensed institutions, particularly a fraudulent entity called "bahrain.bitcoin". This warning was issued in January 2020 after the institution claimed on Instagram to be a licensed cryptocurrency trading platform, which is false. The CBB emphasizes that promoting financial services to residents in Bahrain falls within the scope of regulated financial services as per the Central Bank of Bahrain and Financial Institutions Law of 2006.

The CBB urges consumers to exercise caution when investing, dealing, or trading with any persons, institutions, or companies, including those on social media. It is important for consumers to verify that these entities hold the necessary licenses from the CBB to engage in such activities. The CBB's website provides a register of licensed financial institutions, which consumers can refer to before investing any money.

The CBB's warning against unlicensed institutions is part of its commitment to protecting consumers and ensuring the legitimacy of financial services in Bahrain. By taking a proactive approach, the CBB helps to safeguard consumers from potential scams or fraudulent activities. This also aligns with the CBB's regulatory efforts to govern and license crypto-asset services in the country.

The CBB has implemented comprehensive regulations, known as the CBB Rulebook, to oversee the licensing and operation of crypto-asset services in Bahrain. These regulations aim to minimize the risk of financial crime and illegal use of crypto-assets, while also promoting innovation and growth in the fintech sector. The regulations cover various aspects, including licensing requirements, capital requirements, cyber security, reporting, and conduct of business obligations.

By issuing warnings against unlicensed institutions and establishing comprehensive regulatory frameworks, the CBB plays a crucial role in maintaining the integrity and security of Bahrain's financial landscape, particularly in the emerging area of crypto-assets and cryptocurrency trading. Consumers can protect themselves by verifying the authenticity of financial institutions and exercising caution when dealing with entities that market investments through social media platforms.

Bahrain is one of the most crypto-friendly countries in the Middle East

The CBB has also licensed several crypto exchanges, including Rain and CoinMENA. These exchanges offer 24/7 customer support and meet all CCSS requirements as crypto custodians. Additionally, the CBB has introduced comprehensive regulations to govern and license 'Regulated Crypto-Asset Services' in Bahrain, demonstrating its commitment to fostering a secure and compliant crypto environment.

The regulatory framework, included in Volume 6 of the CBB Rulebook, covers various aspects of cryptocurrencies, from licensing requirements to control by the authorities. Exchanges dealing with cryptocurrencies must obtain licenses and ensure they do not manipulate the market or breach conflict of interest rules. The CBB also warns consumers against dealing with unlicensed entities, such as the fraudulent institution "bahrain.bitcoin," which claimed to be a licensed trading platform.

Bahrain's crypto-friendly stance provides several benefits for those looking to buy and sell Bitcoin. The country's low energy costs make it an attractive option for mining, although the upfront investment required for mining equipment may outweigh the potential profits. Overall, Bahrain's progressive approach to cryptocurrency regulation and its focus on financial technology make it a leader in the region for crypto-related activities.

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