Binance secures in-principle approval to operate from Central Bank of Bahrain

The Central Bank of Bahrain has granted Binance, the world's largest cryptocurrency exchange by trading volumes, an in-principle agreement to become a crypto-asset service provider in the kingdom.

The CBB's move makes it the first regulator in the Middle East and North Africa region to grant such an approval to a Binance entity.

The exchange's licence application is part of its plans to become a fully-regulated centralised cryptocurrency exchange.

"The in-principle approval from CBB still requires Binance to complete the full application process, which is expected to be completed in due course," Binance said on Monday.

Binance, which has its headquarters in the Cayman Islands and Seychelles, has faced increased scrutiny from the regulators in the US, UK, Europe and China, largely due to its opaque operating structure. However, the company has been trying to improve its relationship with regulators and has been on a hunt for another location for its global headquarters.

Binance has also sought to expand its presence in the Middle East as it seeks to cash in on the rising acceptance of cryptocurrencies in the region.

The company signed a preliminary agreement with the Dubai World Trade Centre Authority last week to develop an industry hub for global virtual assets in the emirate. The development came a day after the DWTC said it will be setting up a specialised crypto zone, while becoming a regulator for virtual assets and cryptocurrencies.

Bahrain has been a fast mover in adopting financial technology. It issued draft rules to regulate cryptocurrencies in December 2018, which were finalised two months later. The country also provided licences to digital assets exchanges CoinMena and Rain Management earlier this year.

Changpeng Zhao, chief executive of Binance, left and Gabriel Abed, Barbados's ambassador to the UAE, during a panel discussion at Gitex Global in Dubai in October. Photo: Leslie Pableo / The National

These come as crypto adoption in the region picks up pace.

Rain Management said that its trading volumes grew 20-fold during the first half of 2021 to more than $1 billion for the first time.

Binance Holdings is also reportedly in discussions with Indonesia’s richest family, the Hartonos, and state-owned telecom operator PT Telkom Indonesia to set up a cryptocurrency trading exchange, Bloomberg reported. The move would help spur wider adoption of cryptocurrencies in the South-East Asian nation.

The market capitalisation of cryptocurrencies is at almost $2.4 trillion as of Monday, according to CoinMarketCap. Bitcoin, the world's first and biggest cryptocurrency, regained some ground above $50,000 after dropping in the past weeks.

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Yemen's Bahais and the charges they often face

The Baha'i faith was made known in Yemen in the 19th century, first introduced by an Iranian man named Ali Muhammad Al Shirazi, considered the Herald of the Baha'i faith in 1844.

The Baha'i faith has had a growing number of followers in recent years despite persecution in Yemen and Iran.

Today, some 2,000 Baha'is reside in Yemen, according to Insaf.

"The 24 defendants represented by the House of Justice, which has intelligence outfits from the uS and the UK working to carry out an espionage scheme in Yemen under the guise of religion.. aimed to impant and found the Bahai sect on Yemeni soil by bringing foreign Bahais from abroad and homing them in Yemen," the charge sheet said.

Baha'Ullah, the founder of the Bahai faith, was exiled by the Ottoman Empire in 1868 from Iran to what is now Israel. Now, the Bahai faith's highest governing body, known as the Universal House of Justice, is based in the Israeli city of Haifa, which the Bahais turn towards during prayer.

The Houthis cite this as collective "evidence" of Bahai "links" to Israel - which the Houthis consider their enemy.

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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