Dubai’s VARA to see several hundred VASPs enter licensing regime as Hong Kong ups its crypto stance

Dubai’s VARA to see several hundred VASPs enter licensing regime as Hong Kong ups its crypto stance

In a recent Forbes piece, it was noted that the virtual asset regulatory authority in Dubai expects to see several hundred virtual assets exchanges and service providers enter its licensing regime. This comes as CEOs of major crypto exchanges laud both UAE and Hong Kong as crypto hubs.

As per Henson Orser CEO of VARA, speaking to Forbes, “VARA makes Dubai one of a handful of global jurisdictions implementing a mature framework for crypto and virtual assets. The VARA framework expects to see several hundred virtual asset exchanges and service providers in Dubai start to come into its licensing regime in 2023.”

At the same time Hong Kong is also competing to get a piece of the crypto and digital asset market with the launch of new crypto licensing regime. In addition Hong Kong’s banking regulator is pressuring financial institutions including HSBC and Standard Chartered to take on crypto exchanges as clients.

In parallel the Central Bank of UAE came out with its new guidance on anti-money laundering and combatting the financing of terrorism (AML/CFT) for Licensed Financial Institutions (LFIs), banks, finance companies, exchange houses, payment service providers, towards virtual assets and Virtual asset service providers. While VARA came out with its virtual asset rulebook for, the virtual assets transfer,  and settlement service. 

Both countries are showing digital asset entities that they are serious for business. In a Yahoo article, Ben Caselin, CEO of Maskex states Dubai and Hong Kong are establishing themselves as crypto hubs by recognizing the potential for virtual assets and blockchain technology.

He explains, “Much of the discussion has focused on whether Dubai, Hong Kong or indeed some other jurisdiction will come out on top. However, the debate is much more nuanced than that. The emergence of Dubai and Hong Kong as crypto centers is really a testament to the power of healthy competition in spurring innovation in the Web3 space.”

He believes that as the U.S. grapples with crypto regulation, there is a real opportunity for other countries to assert themselves on the more level playing field provided by a digital-first global economy. With favorable yet robust regulatory environments, both Dubai and Hong Kong are well-positioned to lead the way.

Despite being on similar paths, Dubai and Hong Kong have different motivations for their push into crypto and the Web3 space. To him Hong Kong wants to reinvigorate the greater Chinese economy, while Dubai seeks to shift its dependence on oil.

Yet he contends that both have recognized the scale of opportunity and understand that by pooling resources they could be at the forefront of a new wave of digital innovation leading advancements in the scalability, privacy and interoperability of blockchains, therefore benefiting the entire crypto ecosystem.

Gemini crypto exchange becomes another global entity to apply for a crypto license in UAE

Gemini crypto exchange becomes another global entity to apply for a crypto license in UAE

Gemini crypto exchange announced that it has commenced with the process of acquiring a crypto exchange license in the UAE to better serve customers based in the country.

According to Gemini post, “ As a forward-thinking, global financial hub, the UAE is continuing its tradition of leadership by establishing itself as a fast-emerging hub for crypto. By applying for a license, we will be taking another step towards making Gemini a truly global company and advancing our mission to unlock the next era of financial, personal, and creative freedom for all.”

In the week of June 11th 2023, Gemini met with stakeholders thought the region to learn more about the local regulatory requirements and the needs of crypto users.

Gemini added, “ As part of Gemini’s 2022 Global State of Crypto Report, we took a look at adoption of crypto globally across 20 countries. We found that those in the UAE were rapidly acquiring crypto and putting it to use making in-person purchases. We also found high intent to purchase crypto among those who were not yet owners:”

As per the Geminin 2022 global state of crypto report, more than 35% of those surveyed in the UAE had purchased crypto, compared to only 20% of those in the US. While nearly 32% of non-owners in the UAE said they are likely to purchase crypto in the next year.

33% of those in the UAE who own some crypto use it to make in-person purchases at brick-and-mortar retailers, compared to just 19% of owners globally. Blog state of crypto 2023

Gemini based on the findings from the report and the conversations with regulatory stakeholders, startups and other ecosystem participants decided to further cement their interest in investing in the UAE and becoming part of their crypto community.

Gemini has now joined the roster of other global exchanges seeking to be regulated in the UAE, including crypto.com, Binance, OKX, Maskex, Coinbase and many others.

This has also been spurred by the recent crypto shake down happening in the USA.

There is a bright side to the U.S. SEC charges against Binance

There is a bright side to the U.S. SEC charges against Binance

CZ the Co-Founder of Binance has taken to twitter after word came out that the U.S. SEC ( Securities and Commodities Authority) has sued Binance US and its founder for providing trading for securities such as BNB, BUSD, SOL, ADA, MATIC, FIL, ATOM, SAND, MANA, ALGO, AXS, and COTI. The U.S. summarizes the case as a blatant disregard of the federal securities law and the investor and market protections these laws provide. The SEC states that Binance has enriched itself by billions of U.S. dollars while placing investors’ assets at significant risk.

The 13 charges come after the CFTC unveiled a similar complaint against Binance and Zhao earlier this year.

CZ on twitter stated, “4. Our team is all standing by; ensuring systems are stable, including withdrawals, and deposits.  We will issue a response once we see the complaint. Haven’t seen it yet. Media gets the info before we do.”

 Charles Hoskinson of IOHK, who had tweeted, “With respect to Binance, I’m reading through the SEC complaint. It’s over 130 pages, but seems like the next in a series of steps to implement chokepoint 2.0 in the United States. The end goal is an agenda based CBDC partnered with a handful of massive banks and end-to-end control.”

To that CZ replies, “a perfect opportunity for the entire industry to set aside it’s fragmented nature and unite for a common sense set of rules and guidelines”

Binance issued a statement expressing its disappointment with the U.S. Securities and Exchange Commission, stating that they have actively cooperated with SEC’s investigations and have worked hard to answer their questions and address their concerns.

The statement reads, “Most recently, we have engaged in extensive good-faith discussions to reach a negotiated settlement to resolve their investigations.  But despite our efforts, with its complaint today the SEC abandoned that process and instead chose to act unilaterally and litigate.  We are disheartened by that choice. “

They add, “We intend to defend our platform vigorously.  Unfortunately, the SEC’s refusal to productively engage with us is just another example of the Commission’s misguided and conscious refusal to provide much-needed clarity and guidance to the digital asset industry.”

According to Binance, an effective regulatory framework demands collaborative, transparent, and thoughtful policy engagement, a path the SEC has abandoned. Because of our size and global name recognition, Binance is an easy target now caught in the middle of a U.S. regulatory tug-of-war.”

It also explains that because Binance is not a U.S. exchange, the SEC’s actions are limited in reach.  Still, we stand with digital asset market participants in the U.S. in opposition to the SEC’s latest overreach, and we are prepared to fight it to the full extent of the law.

Talal Tabaa, Co-Founder of CoinMENA a crypto broker exchange, told LaraontheBlock, “Honestly, I am not surprised. The SEC has had Binance and CZ in their sights for a while now. Binance operations and ownership structure have always been opaque when compared to others. We will have to wait and see the extent of these charges because the SEC has been on a quite aggressive path with crypto and is pushing many onshore exchanges offshore.”

As for the bright side Tabaa adds, “Ethereum wasn’t listed as part of the assets that are centralized in nature which is a huge win.”

Waseem Mamlouk, Founder of NMB Fintech,  believes that the USA is going after crypto and SEC is the working end of that very focused policy. the USA via the SEC sees alternative assets such as Bitcoin as a threat to fiat currencies especially the US dollar which is the most hegemonic currency, and used in trade deals taking place 24 hours a day.

He adds, “Maintaining that portion size of global market is really big deal for the USA. In absolute terms the USA is biggest money printer in the world, making its product highly diluted which makes them go after all alternative assets and shut them down.

He explains, If you look at late 2021 BTC had a I trillion dollar market cap while today the entire crypto market is under a trillion, so things have changed.

The positive thing according to Mamlouk is that companies are looking to set up in crypto friendly jurisdictions. He notes that a company he is acquainted with which has a 100 million dollar hedge fund that includes stablecoins, early venture startups, Web3 and crypto companies are interested in seeking regulation in markets such as Bahrain.

He finally explains that if the US were to diversify large transactions could be settled in alternative assets, this would be good for US economy. For him the world is changing and as such we have to change with it. This is the natural evolution of economic systems and financial markets.

In conclusion he believes that if you put more things on blockchain, you will achieve more transparency, and trace transactions. Gone are the days where banks such as HSBC can launder money for drug cartels in Mexico. Blockchain and crypto bring more accountability traceability and transparency so the banking structure needs to evolve into this world.

So despite the bad news with SEC versus Binance, there is always a bright side. 

World Economic Forum calls UAE crypto regulatory framework as agile and benefiting innovation

World Economic Forum calls UAE crypto regulatory framework as agile and benefiting innovation

World Economic Forum report entitled “  Pathways to the Regulation of Crypto-Assets”  says UAE crypto asset regulatory framework is an agile one,  defining it as flexible, iterative and proactive which is beneficial because it is flexible, appreciate market maturity and ecosystem development.

According to the WEF report, regulators that fall under this model include the Swiss Financial Market Supervisory Authority. FINMA’s token classification prescribes three simple categories: payment tokens, utility tokens and asset tokens. The framework acknowledges hybrid tokens and that a token’s classification may change over time. Following the first classification, FINMA later also published further guidance in

Also included as per the report are the regulatory sandboxes in the EU and India in addition to the UAE. 

Instead of prescribing and enforcing rules, agile regulation adopts a responsive, iterative approach, acknowledging that policy and regulatory development is no longer limited to governments but is increasingly a multi-stakeholder effort. Yet it also faces challenges that include the need for coordination and collaboration being as well plagued with uncertainty. 

Regulatory sandboxes, guidance and regulators’ no-objection letters are all forms of agile regulation that enable the testing of new types of solutions, iterating policy frameworks based on ecosystem evolution and industry needs.

The report sets out to understand and highlight the needs and challenges in developing a global approach to crypto-asset regulation. In doing so, it delves into the various regulatory approaches being adopted by different jurisdictions.

The report developed rankings for each regulatory framework. The rankings covered four areas when analyzing regulatory frameworks and found that the agile regulatory framework is best at promoting innovation. Agile regulatory framework ranks in the middle ground for providing certainty for businesses, addressing data gaps and enforcement effectiveness.

The report finds for example that Regulation by enforcement which the USA falls under is weak in all the above mentioned areas except for enforcement effectiveness.

As per the report the UAE has not only initiated a license regime for crypto assets, but has also carried out consultation for decentralized applications such as DeFi, and DAOs.

In addition the report mentions that few jurisdictions have chosen to address the difficulty of classifying tokens, partially relying instead on the functionality enabled by the token.

For example, Liechtenstein has chosen not to rely solely on classifications but to introduce the token as such as an element in Liechtenstein Law, meaning that the right or asset represented in the token triggers the application of special laws (the so-called “token container model”). This means that the tokenization as such has no legal effect: if a financial instrument is tokenized, the financial market laws are applicable if the activity is regulated, too; if a commodity is tokenized, the laws for commodity trading might be applicable; and so on. For new instruments, such as utility coins and virtual currencies, a new regulation has to be defined.

While in the UAE, the Virtual Assets Regulatory Authority in Dubai has put forth a framework that is underpinned by overarching regulations and compulsory rulebooks, segregating activities-based rulebooks to rapidly account for novel products, emerging technologies, and new business models that require regulatory capture.

The paper’s findings reinforce the urgent need for policymakers and regulators to collaborate with industry and users to realize the benefits while addressing the risks involved.

Enforcement is still weak globally. For example in the context of AML supervision of crypto-assets, a Bank for International Settlements (BIS) 2021 survey found that oversight remained nascent globally. As stated, “Although many are at different stages, with some countries still finalizing applicable law and policy and a small portion engaging in active supervision, by and large effective enforcement measures remain a work in progress. The result is a complex tapestry of enforcement trends as well as enforcement risks posed by the cross-jurisdictional influence of crypto-assets.”

Even when it comes to the FATF travel rule implementations are also limited. As noted in FATF’s June 2022 targeted update report, interoperability across technical solutions and across jurisdictions is still lacking.

WEF report as such notes that such fragmented enforcement techniques will pose a challenge to the supervision and monitoring of crypto-assets against regulations in the short term and may take many years to standardize.

The report recommends promoting a harmonized understanding of taxonomy/classification of crypto assets and activities, set out best practices and baseline regulatory standards for achieving the desired regulatory outcomes and encourage passportability of entities and data sharing.

Building on this foundational paper, the World Economic Forum’s Blockchain and Digital Assets team will launch an initiative focused on evaluating the outcomes of different regional approaches to regulation. This effort will convene public- and private-sector leaders to reveal first-hand learning’s and the unintended consequences.

But not everyone shares the WEF reports belief that International crypto regulations and standards are possible.  During the Qatar Economic Forum this week, Peter Smith Co-Founder and CEO of Blockchain.com rejected claims of a “United Nations” of crypto as inconceivable. He stated, “A global system to regulate cryptocurrency is unlikely to exist.”

However, the Blockchain chief recalled the recent EU passing of the world’s first comprehensive package as a step forward in cautiously regulating the cryptocurrency industry. In addition, Smith told Bloomberg that regulators that express optimistic calls to crypto would promote development for the industry.

So whether a global harmonic set of crypto assets regulations are formulated or whether regional and national countries work to build their own, the growth of crypto assets cannot be curved by regulators. 

UAE Securities and Commodities Authority issues two new virtual asset regulations for rulebook

UAE Securities and Commodities Authority issues two new virtual asset regulations for rulebook

According to a recent Baker McKenzie client alert, the UAE Security and Commodities Authority has issued two new regulations pertaining to virtual assets. UAE SCA will be creating a list of accepted virtual assets as well as regulations allowing already regulated financial institutions to offer virtual asset services while amending capitalization requirements for virtual asset exchanges, custodians, and brokers.

These regulations while published in Arabic were translated by Baker Mckenzie in their client  report.

As per the report, the SCA has issued two new decisions,  (26/RM) of 2023 in relation to Virtual Assets Platform Operators (the “SCA VA Exchange Regulations“); and  Decision No. (27/RM) of 2023 amending SCA Chairman of the Board of Director’s Decision No. (13/RM) of 2021 in relation to the SCA Rulebook (the “SCA Rulebook Amendments Regulations“).

The SCA VA Exchange Regulations define VAs as a “digital representation of a value that can be traded or digitally transferred and can be used for investment purposes, and does not include digital representations of fiat currencies, securities, or other funds”.

The SCA VA Exchange Regulations clarify that VA Exchange Platform Operators will be subject to certain provisions of: the SCA Board of Director’s Decision No. (2/R) of 2001 concerning the Regulations as to Trading, Clearing, Settlement, Transfer of Ownership and Custody of Securities, as amended (the “SCA Trading & Settlement Regulations“); and the SCA Rulebook (SCA Chairman of the Board of Director’s Decision No. (13/RM) of 2021).

Samir Safar-Aly, MENA FinTech & AI Lead at the international law firm, Baker McKenzie, told Lara On the Block, “SCA is fulfilling its role as the federal level VASP regulator in the UAE. Following Cabinet Resolution No. 111 of 2022, in addition to being the UAE’s federal-level securities, commodities and capital markets regulator, SCA became the federal VASP regulator. This is a positive step towards making the UAE, as a whole, a jurisdiction with a supportive legal and regulatory framework for Virtual Assets and Crypto-related services. There are significant consumer protection and financial crime related concerns within the Virtual Assets and Crypto sector, and having a regulatory framework to support growth is what many major players in this space are often struggling to find in other jurisdictions.”

Baker Mckenzie  states that the SCA have taken a similar approach to that of the DIFC’s DFSA and the ADGM’s FSRA (both of which have taken a ‘Recognized Crypto Token’ / ‘Accepted Virtual Asset’ approach) in that no VAs may be traded on such platforms unless approved on the SCA’s Official List of Virtual Assets.

UAE Cabinet Resolution 112 outlines that VARA’s decisions shall be consistent with the decisions issued by the SCA.

As for the relationship between SCA and other regulatory authorities, Samir, explains to Lara on the Block, “Under both Cabinet Resolution No. 111 and No. 112 of 2022, the relationship between SCA and other “Local Licensing Authorities” (which only includes VARA at the moment), makes it clear that the SCA would retain sole regulatory remit over “digital securities” and “digital commodities” in Onshore UAE. Separately, UAE Cabinet Resolution 112 outlined the relationship between the SCA and VARA in particular, whereby there will be joint regulatory roles between the two authorities through delegated authorities (granted to the SCA under UAE Cabinet Resolution 111) to VARA accordingly.”

As per Baker McKenzi, the second of the New SCA Regulations, amends certain provisions of the SCA Rulebook in relation to VAs and includes VAs to the list of products that may be dealt or brokered by SCA-regulated financial institutions.

The definition of ‘Brokers’, ‘Dealers of Financial Products’, ‘Financial Consultation’, ‘Portfolio Management’ and ‘Custody’ services, all now extend to and cover VAs, with relevant compliance-related obligations.

Samir explains, “Under the new SCA regulations, existing SCA-regulated financial institutions can extend their activities to Virtual Assets. However, this will need to be in collaboration with discussions with SCA to ensure that adequate systems, controls, expertise and disclosures are in place, including relevant amendments to regulatory business plans and compliance / AML policies”

Finally a new Category 7 License in relation to VASPs has been added to the SCA Rulebook, outlining the following capital requirements, a capitalization of AED 1 million plus six months of operating expenses if the activity is operating a VA Exchange Platform only; a capitalization of AED 2 million if the activity is the Brokerage of VAs; a capitalization of AED 4 million plus six months of operating expenses if the activity is the Custody of VAs; and a capitalization of AED 5 million plus six months of operating expenses if the operator of a VA Exchange Platform provides any other VA service.

As for the future, Samir expressed that both digital Securities and digital Commodities, under Cabinet Resolution No. 111 of 2022 remain in the regulatory purview of SCA in Onshore UAE including the ‘Onshore’ Dubai territory that VARA covers. He expects SCA to issue guidance relevant to such products in the near future.

As for payment tokens, Samir clarifies that this is the regulatory remit of the Central Bank of the UAE (CBUAE). When VARA issued its Rulebooks in February this year, it noticeably did not issue its Payments & Remittances Services Rulebook. He states,” I would expect this to be issued in due course once similar arrangement to those that have taken place between VARA and SCA, take place between VARA and the CBUAE.”

Crypto exchange MaskEX to set up headquarters in UAE after receiving initial approval from UAE regulator

Crypto exchange MaskEX to set up headquarters in UAE after receiving initial approval from UAE regulator

Crypto exchange, MaskEX has unilaterally announced receiving an initial approval from Dubai’s Virtual Asset Regulatory Authority (VARA) to begin making preparations for its launch in the United Arab Emirates (UAE). It also will be opening its headquarters in Dubai and hiring. 

As per the announcement, the approval represents a major milestone for MaskEX, which has been working tirelessly to expand its presence in the Middle East and bring the benefits of virtual assets to a wider audience.

MaskEX will begin finalizing its entity incorporation, engage banking services, hire more staff in Dubai for its soon-to-be-opened headquarters office, and take the necessary steps to become the first regulated exchange in the UAE.

The services and activities MaskEX has applied for include exchange, lending and borrowing, broker-dealer, and virtual asset management and investment services, with the aim of obtaining VARA’s highly acclaimed FMP license. This license will enable MaskEX to operate in and from Dubai while upholding its commitment to regulatory compliance, customer protection, and innovation. 

“We are extremely proud and grateful to have received initial approval from VARA, which is a testament to our commitment to meeting the highest regulatory standards,” said Eric Yang, CEO of MaskEX. “We believe that our platform will provide users in the UAE with a safe, reliable, and efficient way to access the world of virtual assets, and we look forward to launching as soon as possible, while strictly adhering to the requirements laid out by VARA.”

“The initial approval from VARA is a major milestone for us, and is of great significance not just for the UAE but for the entire MENA region,” said Ben Caselin, Vice President and Chief Strategy Officer of MaskEX. “We look forward to working closely with the regulatory authorities to ensure that our platform meets all necessary requirements and provides a secure and transparent environment for our users.”

Crypto Exchange RAIN Bahrain traded $484 million worth of crypto with Ethereum and XRP leading over Bitcoin

Crypto Exchange RAIN Bahrain traded $484 million worth of crypto with Ethereum and XRP leading over Bitcoin

Crypto Broker Exchange RAIN Bahrain has traded $484 million worth of crypto since its inception in 2019 with Ethereum the most traded crypto asset followed by XRP. 

RAIN has noted that it has a  customer base of 75,000 from Bahraini residents signed up on the platform. 

According to the RAIN LinkedIn post “We’re thrilled to share some exciting news about our impact on the Kingdom’s crypto market! Since launching Rain in 2019, we’ve been able to offer our customers a reliable and secure platform for trading crypto assets. We’re grateful for Bahrain’s strong support for innovation and entrepreneurship, which has contributed to our success. Thank you to the people of Bahrain and Team Bahrain for your unwavering support!” 

As per their statistics 41% of active crypto traders in Bahrain chose RAIN, while 5% of crypto trades in Bahrain are carried out on RAIN. 

In addition the biggest traded cryptocurrencies on RAIN Bahrain are Ethereum, Bitcoin, XRP, Litecoin and tether. Statistically Ethereum has the highest percentage of trades at 37% followed by XRP (Ripple token) at 25% and Bitcoin at 20%, while Litecoin 7% while Tether USDT is 5% of trade and 6% is distributed to others. 

In terms of the age groups trading on RAIN, the biggest age group is from 30-34 years old followed by those over 40 years old. The youth make up only 10% and refers to those from18 to 24 years old, while 22% are from 25 to 29 year olds. 

Bahrain was the first country in the GCC to launch crypto exchange licenses and RAIN was the first operator to launch in Bahrain. Since then CoinMENA, Binance have followed suite. In addition recently BitOasis also noted that it was in the midst of receiving a license in Bahrain. 

Bahrain also recently was the first country in the GCC to issue onshore security token regulations.

UAE virtual asset regulator takes further action against OPNX tokenized exchange

UAE virtual asset regulator takes further action against OPNX tokenized exchange

The Dubai Virtual asset regulatory authority, has issued a formal letter of reprimand to OPNX the tokenized exchange for bankrupt crypto entities,  and its founders for carrying out virtual asset Exchange Services on an unregulated basis in Dubai; and for marketing, promoting and/or advertising OPNX services and its native token [FLEX] without the necessary permits from VARA.

Dubai virtual asset regulator in February 2023 became aware that OPNX exchange was soliciting, and collecting personal data from the public to participate in its new (to be launched) exchange. Through social media platforms, OPNX had been engaged in marketing the exchange without establishing warranted restrictions for residents of Dubai/UAE.

The announcement on VARA goes on to note, “Then on April 4th  OPNX launched the exchange on opnx.com, providing VA Exchange services – a regulated activity under the VARA regime, without securing any regulatory licenses, and as such operating in contravention of local laws.”

As a result VARA issued several cease and desist orders for OPNX followed by the marketplacealert which was later followed with a  written Reprimand issued by VARA to OPNX; 4 founders (Mark Lamb, Sudhu Arumugam, Kyle Davies and Su Zhu); and CEO (Leslie Lamb).

With the continued lack of satisfactory remedial action by the responsible parties, VARA has stated that it is continuing to actively monitor the situation and investigate OPNX’s activity to assess further corrective measures that may be required to protect the market.

This action from VARA comes after OPNX has raised criticsm with some of its recently named investors distancing themselves and refuting investments in OPNX. 

OPNX CEO Lesli Lamb had announced the list of investors which included a saudi arabian investment firm. 

BitOasis receives MVP Operational License from Dubai Virtual asset regulator

BitOasis receives MVP Operational License from Dubai Virtual asset regulator

As per Dubai VARA website, BitOasis, the crypto broker exchange has moved one step forward in its licensing process. It has become the first among VARA’s crypto broker dealers to receive MVP (Minimum Viable Product). operational license one step before the FMP ( Full Minimum Product) Operational License.  

CoinMENA, Scallops, and MidChains are still in the first stage as MVP provisional while GCEX has received an MVP preparatory license one step before MVP operational license.

BitOasis applied for VARA licensing in March 2022. At the time BitOasis had carried out crypto trades worth $4 billion. Ola Doudin Co-Founder and CEO of BitOasis has stated at the time, “  “We will continue to strive to offer our customers the most customized platform for their local needs in accordance with regulations that will best protect them both now and as the industry evolves.”

In April of 2021, BitOasis announced that it had been granted a a Financial Services Permission (FSP) from the Financial Services Regulatory Authority (FSRA) in the Abu Dhabi Global Market (ADGM) in the United Arab Emirates (UAE), but is still awaiting additional launch approvals as well.

BitOasis has raised a total of $30 million in funding from investors such as Alameda Research, Digital Currency Group, Global Founders Capital, Jump Capital, NXMH, Pantera Capital, Wamda Capital and others.

In October 2022 UAE based crypto exchange BitOasis, and MasterCard launched crypto card programs across the MENA region to facilitate day to day usage of cryptocurrencies at points of sale and ecommerce websites.

On Monday May 1st, Bitoasis in its official announcement and VARA made the following statements,

 Henson Orser, Chief Executive Office, VARA stated “We are pleased to welcome BitOasis to the MVP Programme phase. The VARA ecosystem aims to strike a balance between value creation, risk mitigation and enhanced investment opportunities with consumer protection at its core. BitOasis has demonstrated a strong commitment to operating with a firm bias for regulation throughout the licensing process. One of VARA’s founding principles is creating an equal opportunity regime for responsible VASPs and being able to onboard credible home-grown companies, like BitOasis, in addition to leading global platforms, allowing us to bring the shared learnings of our licensees to build the foundation for our global future economy.”

Ola Doudin, co-founder and CEO of BitOasis added, “We are extremely proud to receive VARA’s MVP Operational License. Becoming the first virtual asset trading platform in the MVP programme to attain an operating license is an important milestone for us and the Emirate of Dubai.”

 Samir Satchu, Senior Vice-President of Public Policy & Expansion at BitOasis noted, “Our commitment and ambition at BitOasis is to serve the GCC and MENA region through a network of regulated platforms and on the ground infrastructure. VARA’s MVP Operational License, as well as our in-principle approval in Bahrain, are important building blocks for that strategy. “

BitOasis is following in the footsteps of HexTrust crypto custodian who also received MVP operational license earlier this year.

VARA and UAE’s Security Commodities Authority both announced the commencement of licensing of already existing and new crypto entities. 

Article was updated on May 1st 2023 with quotes from VARA and BitOasis

Bahrain first country in MENA to launch onshore security token regulations

Bahrain first country in MENA to launch onshore security token regulations

Bahrain Central Bank has announced the issuance of regulation for security tokens as amendments to its current crypto asset module.

The Central Bank has expanded the crypto asset regulations to include digital token offerings, in specific those with the characteristics of security tokens.

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 new amendments also outline new requirements to enhance safeguarding clients’ assets to provide high levels of protection for investors.

In addition the Central Bank of Bahrain will 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 – Mrs. Abeer Al Saad, stated,  “We at the CBB are delighted to issue the new amendments to our regulatory framework for crypto-assets and to specifically introduce new regulatory requirements for the digital tokens offerings, in order to regulate the crypto-assets market in a fair and transparent manner. Therefore, the CBB has adopted a risk-based regulatory approach towards requirements, which are proportionate and commensurate to the regulated activity undertaken by a licensee. We endeavour to provide adequate safeguards to investors without inhibiting innovation adoption at the CBB, as we continue to monitor market trends and review the regulatory framework to keep up with the latest developments in the field, as well as maintain the competitiveness of the sector. This milestone is a reflection of the pioneering role the CBB continues to play in regulating crypto-assets.”

Bahrain was the first country in the GCC region to regulate crypto allowing for the launch of crypto exchange brokers such as RAIN, CoinMENA, and most recently Binance. It is also one of the leading GCC and MENA countries when it comes to crypto payments.

The new amendments are also a first in the region, no other country has regulated security tokens onshore yet!