The Central bank of Bahrain has granted yet another sandbox license to a UAE cryptocurrency firm that will allow it to run a cryptocurrency exchange marking the first and only such exchange in the Middle East and North Africa. Under this license, the firm has to follow the required KYC & AML measures.
CBB grants Sandbox License
The cryptocurrency exchange, Palmex powered by ArabianChain technology has been granted a regulatory sandbox license by Central Bank of Bahrain (CBB). This move will be effective from next month i.e. July 15.
According to the local media report, the Dubai-based blockchain startup is apparently “the first and only cryptocurrency exchange in the Middle East and North Africa to receive a regulatory sandbox license.”
On this development, the founder and CEO of ArbianChain, Mohammed Alsehli stated:
“ArabianChain will start with a limited number of select users to test and optimize the process and then expand to the rest.”
A regulatory sandbox is basically a framework as well as a process that facilitates the development of Fintech industry in a safe manner. This regulatory sandbox requires the companies to adhere to the CBB regulations that involve Anti-Money Laundering, Countering Financing of Terrorism and Know your Customer (KYC). Furthermore, following the proper disclosure, compensation, and protection requirements related to customers.
Alsehli further explained:
“The wild fluctuations and the phenomenal surge in valuation of cryptocurrencies like Bitcoin have continued to drive exponential growth in demand to trade and issue digital assets. The region has been eagerly waiting for a regulator-approved platform that makes it possible for them to buy and sell in a secure environment.”
A safe & controlled testing environment
Bahrain introduced regulatory sandbox at the end of 2017 in order to allow the experimentation of digital currencies in a controlled environment. In January this year, Malaysia-based crypto tech provider, Belfrics Global was allowed to open a crypto exchange under regulatory sandbox.
By enabling a regulatory sandbox, Bahrain is planning to emerge as a crypto exchange hub. Previously the CEO of Bahrain Fintech Bay had told a media source,
“As long as the business qualifies as a fintech (financial technology), we will welcome it. The focus is on developing the culture of entrepreneurship in Bahrain.”
As for the regulating or legitimizing the cryptocurrencies that are under the scope of CBB whose stance on crypto legality has been commented previously by a government official,
“As of now we recognize cryptocurrency as a commodity that can be traded in the exchanges. We are not considering it as a legal tender in any form.”
Bahrain Fintech Bay is reportedly the largest fintech hub in the Middle East and North Africa (MENA) region. With sandbox license, central bank allows the fintech firms to showcase the technology through the lighter entry and capital requirements.
What are your views on the sandbox license and rising interest in crypto exchanges in Bahrain? Share your thoughts with us!