Bahrain is splurging on crypto, garnering global attention
While the UAE and Saudi have been making important steps introducing regulations and launching blockchain and crypto technologies, Bahrain has unleashed a series of initiatives towards full-fledged adoption.
Officially backed crypto exchange
Revealed exclusively to CoinDesk, two blockchain veterans are gearing up to launch what could be the first cryptocurrency exchange in Bahrain to be licensed by a central bank.
Rain Financial has opened its public waiting list after a year in the Central Bank of Bahrain’s fintech sandbox. Co-founded by Saudi blockchain consultant Abdullah Almoaiqel and Egyptian investor-turned-meetup organizer Yehia Badawy, along with their business partners Joseph Dallago and AJ Nelson, Rain aims to offer both a brokerage for retail crypto investors and an institutional platform along the lines of Coinbase Pro in Silicon Valley, according to Coindesk.
Rain was the first to join Bahrain’s Sandbox in September 2017 and expects to launch in early 2019, while 5 other exchanges still experiment in a closely supervised environment before licensing.
As it stands, few Persian Gulf residents officially participate in the crypto markets, partly for fear of the sector’s shadowy reputation (although Dubai has notably been a pioneer of “smart city” applications of blockchain technology).
Crypto-curious investors “are waiting for the right regulations to be in place and the right partners,” Rain co-founder Badawy said. “We are here to fill this demand, with institutional-grade infrastructure.”
Rain has attracted investments from crypto veterans such as Cumberland Mining founder Mike Komaransky, Bitcoin Core developer Jimmy Song, and BRD crypto wallet cofounder Aaron Lasher.
“Rain founders have been meeting with institutional players throughout the region, from bankers to regulators, seeking their support,” said Coindesk.
Around the Gulf region, regulations have kept the asset from growing. Kuwaiti regulators have essentially banned institutional traders from working with cryptocurrencies. Meanwhile, the Saudi Arabian Monetary Authority asserted in August 2018 that “no parties or individuals are licensed” to trade Bitcoin in the kingdom.
After months of educating regulators about the know-your-customer and anti-money-laundering standards applied by Western exchanges, which it plans to follow, Rain says it has secured banking partners to allow fiat-on ramps in all the local Gulf currencies.
“It’s been a long journey educating our different regulators and partners,” Badawy said.
BusinessLine reports that back in March, Bahrain enabled a ‘regulatory sandbox’ towards emerging as a global cryptocurrency exchange hub.
Amazon Web Services Inc. recently announced that it’s setting up shop in the Middle East for the first time, in Bahrain, in early 2019, with three Availability Zones.
Bahrain’s hopes to leverage technological innovations from a cloud-first position and as data becomes the new currency, Bahrain has many dreams of investing further in startups, as well as financial technology. Khalid Al-Rumaihi chief executive of the Bahrain Economic Development Board said.
“I emphasize this is going to be a game changer, not just for the kingdom of Bahrain, but for the entire Middle East,” Al-Rumaihi concluded. “It’s a small country; we can be nimble, agile, startup-friendly, and … innovate. And so we’re determined to carve a niche in open banking, in cryptocurrency exchanges, these being interesting innovation areas that we think we can excel at.”
According to News.bitcoin, Al Rumaihi mentioned the country has been eyeing the blockchain sector for some time and that he hopes Bahrain can “issue bonds on digital currency.”
Funds Global MENA
Private investors in Bahrain hope to launch a $100 million fund dedicated to financial technology, according to a government official quoted by the India-based Economic Times (ET).
In May a $100 million fund of funds was launched by the Development Bank of Bahrain to focus on financing start-ups in Bahrain and its neighboring states.
Bahrain’s central bank has also set up a division dedicated to regulating the fintech sector and emerging sectors such as cryptocurrency and artificial intelligence, according to ET.
Sandbox licensing galore
The recently launched Bahrain FinTech Bay is the largest fintech hub in the Middle East and North Africa (MENA) region. It is also Bahrain’s first fintech hub.
According to Bitcoin.com, the Central Bank of Bahrain Granted a Sandbox License to Malaysian-based cryptocurrency technology provider Belfrics Global, to open a cryptocurrency exchange in the nation. The approval granted by the central bank of Bahrain is expected to give Belfrics access to the $50 billion digital transaction industry of the Middle Eastern/North African nation.
The company is working closely with central banks in Africa, the Middle East, and Asia to regulate the cryptocurrency space using its innovative KYC-based blockchain, Belrium.”
According to CCN, Stellar obtained the Shariyah Review Bureau (SRB) certificate, as the authority licensed by the Bahrain Central Bank allowed Stellar to establish a presence in the country once the recommendations are fulfilled.
What Stellar is interested in is overseas payments and asset digitization.
Bitcoin.com also reported the Central Bank of Bahrain reportedly granting in June a regulatory sandbox license to the operator of Palmex, a Dubai-based cryptocurrency exchange.
The Dubai International Financial Center (CPI Financial) elaborated then:
Palmex, a professional digital asset exchange powered by Arabianchain Technology, has become the first cryptocurrency exchange in the Middle East and North Africa (MENA) to receive a regulatory sandbox license.
According to its website, the exchange offers “multiple trading pairs including Bitcoin and Dubaicoin DBIX, the first decentralized cryptocurrency in the region,” in addition to ETH, LTC, and XRP.