First fully regulated cryptocurrency exchange launches in the Middle East
Spot the difference between Bahrain's holistic crypto regulations, and the chaos in the USA.
Rain, a new cryptocurrency exchange based in Bahrain, has become the first fully regulated cryptocurrency exchange in the Middle East. It holds a Crypto-Asset Module (CRA) licence, years in the making.
Rain first made contact with the Central Bank of Bahrain (CBB) in February 2017, then made its way through a regulatory sandbox before obtaining its licence.
The CRA is designed to serve as a comprehensive licensing procedure for crypto-asset related services in Bahrain, encompassing just about everything to do with cryptocurrencies, including exchange businesses, crypto investment management and crypto custody services.
As is typical, the CRA lays out certain conditions companies have to meet before they can get the licence and start serving customers. Among them are conditions relating to:
- Legal status in the country
- Initial and ongoing capital requirements
- Annual CRA licence fees
- Case-by-case CBB approval for company directors, CEOs, CIOs, compliance officers and other executives
- Regulator auditing obligations, maintenance of certain accounting standards
- Cybersecurity and technology management
- The provision of information to CBB on request
- Prevention of market abuse and manipulation
Forward looking statements
The CRA licence itself is an example of how different countries are taking steps to safely encourage the growth of a clearly and well regulated local cryptocurrency industry.
The Rain exchange has been in the works since 2017, when it first approached regulators in Bahrain. And by working alongside regulators, Bahrain has ended up with a comprehensive new set of regulations for its cryptocurrency industry, which falls under the CBB's umbrella.
Contrast that to the experiences of USA-based cryptocurrency exchanges, who have been forced to contort themselves around inflexible state-by-state regulators.
How Coinbase is regulated
Coinbase is licensed as a money transmitter in most states of the USA – although it cannot transmit virtual currency in Alaska, its money transmission licence does not apply to virtual currencies in Louisiana, Tennessee, Nevada or Virginia.
It offers 23 different digital assets, but not simultaneously. You can buy, send and receive BAT, EOS, LINK and others across the USA except in New York. You cannot buy or sell but can send BSV anywhere in the USA.
CVC is not available on Coinbase but can be found on Coinbase Pro (except in New York) and in other states it's only available for crypto-to-crypto trades, just like MANA. But that's not quite the same as the way XLM is available on both Coinbase and Coinbase Pro, for residents outside New York in both cases, although once again it's crypto-to-crypto trades only on Coinbase Pro even though fiat purchases and even giveaways are fine on Coinbase.
Coinbase has acquired three firms to inherit the licences which would let it operate as a broker dealer, an alternative trading system and a registered investment adviser, with SEC approval for the acquisitions of the licences and companies, but not the cryptocurrencies themselves which may be securities if the SEC decides at a later date.
Bahrain's new Rain exchange is backed by a range of industry heavyweights, including BitMEX.
"We believe that Rain will bring greater diversification to Middle-Eastern traders with its exchange offering and experienced team, and we are thrilled to contribute to this defining moment," said BitMEX CEO Arthur Hayes.
"BitMEX Ventures is devoted to encouraging greater global access to cryptocurrency trading as we start to see the maturation of cryptocurrencies as a legitimate asset class. As the first licensed cryptocurrency exchange in the Middle East, Rain has an unprecedented opportunity to tap into the incredible potential that cryptocurrency trading will bring to the region."
The ongoing lack of regulatory clarity in the USA means its well of cryptocurrency exchanges is drying up. But elsewhere, people are making it rain.
Disclosure: The author holds BNB, BTC at the time of writing.