CBB Issues a New Regulatory Framework for Digital Tokens Further Developing the Crypto-Assets Market

CBB Issues a New Regulatory Framework for Digital Tokens Further Developing the Crypto-Assets Market

The Central Bank of Bahrain has issued amendments to its Crypto-assets (CRA) Module in March 2023, following a consultation process with the industry stakeholders. 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.

With the new amendments, the CBB expanded the scope to comprise “Digital Token Offerings” as part of its framework for regulated crypto-assets activities. 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. 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.

Commenting on the new amendments, Director of the Capital Markets Supervision Directorate –