The Central Bank of Bahrain has launched a regulatory sandbox to allow blockchain and crypto companies to operate in the country.
Previously, in December 2018, it was reported that draft proposals have been issued by the central bank to potentially license and regulate virtual assets and services. However, the prospective framework is still in the consultation process. Therefore, in the meantime, the new sandbox approach will allow companies in the sector to work without fear of regulatory backlash. It will remain functional for nine months and should be considered as a trial, noted the report.
While talking to the media, the business manager of Bahrain’s Economic Development Board, Dalal Buhejji said that sandbox will allow crypto and blockchain companies to test their products on a limited number of users. Firms will be permitted to perform a limited number of transactions. However, the main objective of this initiative is to facilitate the entrance of new companies to the market. According to the report, 28 companies have been selected for the sandbox so far.
The move is part of Bahrain’s efforts to diversify its economy and reduce dependence on oil. Back in 2014, crude oil prices suddenly decreased and put pressure on the Gulf nation’s economy. Now, the country is trying to offset mounting debt by attracting blockchain talent. Although its allies promised to provide USD 10 billion in aid to support its economy, Bahrain is looking to strength itself by turning towards crypto related businesses.
In October 2017, the CEO of Bahrain’s Economic Development Board admitted that blockchain technology was a golden opportunity. Since then, the government has positively endorsed blockchain. In November 2018, a Blockchain Academy was launched by Bahrain’s Institute of Banking and Finance in order to provide training regarding blockchain strategy, development and implementation as well.