Bahrain, once the Middle East’s hub for financial industries, is attempting to regain its footing by allowing companies using cryptocurrency to work in the country on a trial basis, as it considers how to regulate them.
Dalal Buhejji, business manager at Bahrain’s Economic Development Board, said she is confident that the central bank will issue regulation, without specifying a timeline. The central bank said it previously issued a consultation paper on draft regulations for crypto-asset platform operators.
The country’s attempt to attract companies focusing on blockchain technology and cryptocurrency trading comes as the sector remains largely unlicensed and unregulated in major global financial hubs. That’s forcing adopters to seek clarity from smaller jurisdictions that have been more open to regulating the market such as Malta, Liechtenstein, Gibraltar.
The Bahraini central bank allows companies “to test their solution on a limited number of users, with a limited number of transactions,” Buhejji said. The program’s purpose is for companies to find a quick way to enter the market, she added.
SprinkleXchange, an initial public offering platform built using blockchain, is among the 28 companies that received approval to work under the central bank’s so-called regulatory sandbox. Each of those companies operate on a trial basis for nine months, as the central bank looks into potential regulation.
The exchange, run by New York-based Sprinkle Group SA, will go live this month — with an initial cap of 10 listings. It expects to float the first company by May, Chief Executive Officer Alexander Wallin said.
Bahrain’s economy, the smallest among the six members of the oil-rich Gulf Cooperation Council, had been hit hard by lower crude prices since 2014. Its allies last year pledged $10 billion in aid to support the economy.
The cost of operating a business in Bahrain is comparatively lower than in other nations in the region, Buhejji said.