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Bahrain Introduces First-Ever Stablecoin Regulatory Framework to Boost Crypto Transparency

2 days ago
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TLDR:

  • Bahrain mandates 1:1 fiat backing and audits for all licensed stablecoin issuers.
  • Only CBB-approved entities with BHD 250k capital can issue stablecoins.
  • Transparency rules include financial disclosures, risk controls, and IT audits.
  • The framework boosts Bahrain’s role in regional crypto and fintech development.

Bahrain has launched its first regulatory framework for stablecoins, marking a major shift in the region’s approach to digital assets. 

The Central Bank of Bahrain (CBB) released the Stablecoin Issuance and Offering (SIO) Module, setting out clear rules for compliant issuance, custody, and operation. This new framework positions Bahrain as a regional hub for blockchain innovation while enforcing strong compliance measures. 

The rules aim to protect consumers, ensure liquidity, and bring structure to stablecoin activity. The framework arrives amid growing global calls for regulated stablecoins that are fully backed and transparent.

Bahrain Full Fiat Backing and Strict Operational Standards

The SIO Module requires all stablecoins to be fully backed by fiat currencies such as the Bahraini Dinar or the US Dollar. 

Issuers must hold a 1:1 reserve ratio using high-quality, liquid assets. These reserves must be kept in segregated accounts and undergo independent audits. The Central Bank confirmed that redemption rights will remain permanent for holders, and interest payments on stablecoins are strictly prohibited.

Operational transparency is also required. Stablecoin projects must publish whitepapers and financial disclosures. Cybersecurity readiness, risk controls, and annual audits are mandatory. 

The CBB highlighted that these measures aim to limit risks to Bahrain’s financial system while enabling trusted digital asset products.

Bahrain Licensing Process and Eligibility Criteria

Under the framework, only entities licensed by the CBB may issue stablecoins. 

Applicants must show a minimum paid-up capital of BHD 250,000 and provide detailed governance plans. Requirements include financial forecasts, IT systems architecture, shareholder disclosures, and internal controls.

All entities must comply with both IFRS and AAOIFI accounting standards. The CBB retains the right to impose higher capital buffers if risks are identified. It may also reject any applications that could harm Bahrain’s economy or the public.

Crypto Industry Welcomes the Move

The release of the SIO Module has been positively received by crypto firms and compliance experts. 

Rachel Liu, a Dubai-based digital asset consultant, said the framework offers the structure needed to unlock safe and sustainable growth. Bahrain’s decision to enforce clear rules could attract credible players and bring more stability to the digital finance ecosystem.

The move aligns with efforts across the Gulf to develop compliant crypto sectors. With BPay Global, a Binance subsidiary, already licensed to operate in Bahrain, the country signals its intention to become a regional hub for fintech innovation.

Industry analysts view Bahrain’s framework as a possible model for other nations. 

As stablecoins play a growing role in financial transactions, especially in cross-border payments, regulatory clarity becomes essential. Wu Blockchain noted that the framework could help shape policy discussions across the Middle East.

The CBB’s approach may also influence global efforts to regulate stablecoins without stalling innovation. By locking in compliance, Bahrain opens the door for institutional growth and safer crypto integration into the financial mainstream.

 

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Source: https://blockonomi.com/bahrain-introduces-first-ever-stablecoin-regulatory-framework-to-boost-crypto-transparency/