Crypto-currency. Image Credit: Agency

Dubai: The Arab world’s smallest country is taking the lead in regulating crypto assets.

Bahrain’s central bank said on Monday that it issued “the final rules on a range of activities relevant to crypto assets.” The framework covers areas from licensing and governance to cyber security.

The central bank’s “introduction of the rules relating to crypto assets is in line with its goal to develop comprehensive rules for the fintech ecosystem supporting Bahrain’s position as a leading financial hub” in the Middle East and North Africa, Khalid Hamad, executive director of banking supervision at the central bank, said in an emailed statement.

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Once the undisputed banking center of the Gulf, Bahrain is vying to regain its place as competition intensifies from counterparts in the region and beyond. Most central banks around the world aren’t yet convinced of the benefits of digital currencies and don’t plan to issue one any time soon, according to a recent Bank for International Settlements survey.

Bahrain’s neighbours Saudi Arabia and the United Arab Emirates have previously launched a joint pilot crypto currency initiative with the goal of easing cross-border payments and better understanding blockchain technology, a decentralised public ledger of transactions that offers more speed because it doesn’t rely on a central record keeper.

The central bank in Bahrain has already been operating an incubator-style sandbox licensing programme, which included crypto-currency exchange platforms and companies using blockchain. The programme allows them to test out their services as Bahrain looked into regulating the emerging industries and technologies that come along.

Bahrain’s move is a “great step in the right direction for the crypto-asset ecosystem in the region,” said Ola Doudin, chief executive officer of BitOasis, a leading crypto-currency exchange platform in the Middle East and one of the companies enrolled in the country’s regulatory sandbox.