Binance, the world’s largest cryptocurrency exchange, has won regulatory approval from the Central Bank of Bahrain to operate as a crypto-asset service provider in the kingdom.
This is the first licence for the crypto-asset provider in the GCC and is a "milestone in our journey to being fully licensed and regulated around the world", said Changpeng Zhao, founder and chief executive of Binance.
"I’m proud of the hard work ... to meet the stringent criteria of the Central Bank of Bahrain, not just locally but globally by ensuring that we meet and exceed the requirements of regulators and protect users with strong anti-money laundering and counter-terrorism financing policies.”
Binance, which was founded in China in 2017 and has its headquarters in the Cayman Islands and Seychelles, has faced increased scrutiny from regulators in the US, UK, Europe and China. The company has taken steps to improve its relationship with the regulators and also sought to expand its presence in the Middle East as it seeks to cash in on the region's interest in cryptocurrencies.
In December, Binance signed a preliminary agreement with the Dubai World Trade Centre Authority to develop an industry hub for global virtual assets in the emirate. The DWTC is setting up a specialised crypto zone, while becoming a regulator for virtual assets and cryptocurrencies.
Earlier this month, Dubai adopted the first law in the emirate that regulates virtual assets. Last week, the Dubai Financial Services Authority, the regulator of the emirate’s financial hub, published its regulatory framework overseeing crypto tokens, or cryptocurrencies, for public consultation. The proposed regulations aim to protect investors and apply to companies interested in marketing, issuing, trading or creating crypto tokens in or from the Dubai International Finance Centre.
The Middle East received $271.7 billion worth of cryptocurrency between July 2020 and June 2021, which represents 6.6 per cent of global activity, according Chainalysis data.
The region is one of the fastest-growing markets in the world. Turkey has the highest transaction volume at $132.4bn during the July 2020-June 2021 period. The UAE is in third place trailing Turkey and Lebanon with a transaction volume of $25.5bn.
Binance's crypto-asset licence will allow it to provide crypto-asset trading, custodial services and portfolio management to customers under the supervision of the Bahrain regulators.
“Developing regulations aligned with global trends is a key objective for us at the CBB." said Rasheed Al Maraj, governor of the Central Bank of Bahrain. "We continue to work with partners and industry leaders such as Binance to develop regulations that enable innovation and best practices.”
The Bahrain Economic Development Board chief executive Khalid Humaidan said the kingdom has built infrastructure to support the fast-growing blockchain and crypto industry, and collaboration with Binance will enhance the country's appeal.