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The Central Bank of Bahrain (CBB) has announced that providers will be able to issue single-currency stablecoins backed by the Bahraini dinar, the US dollar or any other fiat currency it deems acceptable.
“This initiative underscores the CBB’s unwavering commitment to integrating crypto-related activities within its regulatory frameworks and ensuring they are subject to comprehensive oversight”, said Ali Haroon Al Aamer, director, Capital Markets Supervision Directorate at the CBB.
“It also highlights the CBB’s dedication to providing robust investor protection measures and maintaining a transparent crypto asset market.”
The CBB hopes that the new framework will mitigate the risks associated with the use of unregulated stablecoins.
It is intended to foster a safer, more secure ecosystem that boosts investor confidence and promotes sustainable sector growth.
“By encouraging the development and adoption of innovative financial technologies, the CBB aims to enhance Bahrain’s position as a leading financial hub in the MENA region”, said Mohamed Al Sadek, executive director of market development at the CBB.
“This milestone reflects the pioneering role the CBB continues to play in overseeing the crypto-asset market and ensuring that the Kingdom’s financial services landscape is equipped for future developments.”
Rules set
Under the CBB’s rules for stablecoins, licensees must prominently display information to clients for each listed crypto-asset. This information must include the type of crypto-asset – payment token, asset token, utility token or stablecoin – and its function.
They must also disclose where a crypto-asset is backed by assets, as well as the risks of the crypto-asset, such as its price volatility and any cybersecurity vulnerabilities.
Before commencing operation, a licensee must, after obtaining the CBB’s written approval, appoint an independent third party to undertake a readiness assessment and submit a readiness assessment report.
The readiness assessment report must include the licensee’s risk management system, capital adequacy, organisational structure, operational manuals, information technology, information system security, policies and procedures and internal controls and systems.
Regulatory consistency
Prasad Thandapani, senior analyst at Vixio, noted that the CBB's decision to license stablecoins that are based on other fiat currencies is consistent with the regulatory approaches taken elsewhere, including in Singapore.
“The Middle East is betting big on crypto, and it is no surprise that Bahrain is getting in on the game. Recent years have seen key Middle Eastern markets such as the UAE and Saudi Arabia introduce comprehensive cryptocurrency regulations, including regulation for stablecoins, and it should come as no great shock that Bahrain is doing the same.”
Thandapani added: “Bahrain is a key Sharia finance hub in the region, and it will be interesting to see whether or not this is the beginning of a Sharia crypto industry in the Kingdom.”
Bahrain joins the US and Hong Kong in being among the first wave of jurisdictions to create a regulatory framework for the use of stablecoins.
The US Senate recently passed the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, with bipartisan support, and Hong Kong’s Stablecoin Ordinance, which establishes a regulatory regime for the issuance, marketing and offering of stablecoins, comes into force on August 1, 2025.
In addition, the UK’s Financial Conduct Authority (FCA) is currently consulting on the regulatory measures it will introduce as part of its stablecoin regime.
