The Central Bank of Bahrain published its final set of rules to regulate trading and other activities involving digital currencies, as they grow in popularity across the region and beyond.
“We will continue to enhance our regulatory framework in order to keep pace with the innovations taking place in the major financial centres around the globe,” said Khalid Hamad, executive director of banking supervision, at the central bank, on Monday.
“The CBB’s introduction of rules relating to crypto assets is in line with its goal to develop a comprehensive framework for the FinTech eco-system supporting Bahrain’s position as a leading financial hub in the Middle East and North Africa region.”
Bahrain’s FinTech Bay, inaugurated last February, is home to more than 30 companies working to develop cryptocurrencies, blockchain, digital payments and other financial technologies. Neighbouring Arabian Gulf states including Abu Dhabi and Dubai are also investing to boost the growth of FinTech start-ups.
Last year, Abu Dhabi Global Market, the emirate's international financial hub, was the first to launch a framework to regulate spot crypto asset activities, a step towards developing a safer marketplace for digital currencies in the capital. The regulations to govern the digital assets will oversee activities undertaken by exchanges, custodians and other intermediaries, ADGM said last year.
Meanwhile, the Dubai International Financial Centre’s FinTech Hive, whose startups managed to raise over $10 million in funding in 2017, is aiming to introduce more programmes while adding new innovations in the region’s banking sector.
Earlier this month, Saudi Arabia’s banking regulator said it had started designing a sandbox regulatory environment, in line with its economic transformation.
The move will help the Saudi Arabian Monetary Authority understand and assess the impact of new technologies on the financial services market.
The new CBB rules intend to govern transactions taking place in Bahrain involving virtual currencies such as Bitcoin, and other "crypto assets" operating via the blockchain distributed ledger system and other technologies.
The CBB’s rules “are aimed at ensuring that related activities are brought within the regulatory perimeter and are subject to comprehensive regulatory and supervisory measures”, the statement added.
Bahrain published draft rules to regulate cryptocurrencies in December. The final framework covers requirements for licensing, governance, cyber security standards, anti-money laundering and other risk management measures, as well as avoidance of conflicts of interest, financial reporting and minimum capital required by cryptocurrency firms, the CBB statement said.
They also cover the supervision and enforcement standards for all parties involved in transactions, including custodians, portfolio managers, principals and agents.
Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
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