Bahrain Launches First Stablecoin Framework, Aims to Lead Gulf Crypto Adoption

Bahrain has made a significant advancement in digital finance by releasing its first regulatory framework for stablecoins. This move positions the country as a leader in crypto adoption and financial innovation within the Gulf region. The Central Bank of Bahrain (CBB) has established clear guidelines for stablecoin activities, including issuance, minting, burning, and custody, which are now recognized as regulated financial services. Any entity wishing to operate in this space must obtain a license from the CBB.

The new framework specifically permits only fiat-backed stablecoins, which are pegged 1:1 to currencies such as the Bahraini Dinar or U.S. Dollar. These reserves must be held in liquid, high-quality assets within segregated accounts and audited annually. This ensures transparency and security, providing much-needed clarity and investor protection in the region's growing digital asset space.

The regulatory requirements for launching a stablecoin in Bahrain are stringent. Applicants must meet several criteria, including a minimum capital of BHD 250,000 (~$660,000), a transparent shareholder structure, robust IT and cybersecurity systems, effective risk management and internal controls, and a detailed whitepaper outlining the project's scope and financial details. Additionally, the rules guarantee the right of redemption to stablecoin holders, prohibit interest payments, and grant the CBB the authority to reject any project deemed risky or harmful to the national economy.

Bahrain's commitment to the crypto world is evident through its previous initiatives. In April, Binance’s BPay Global was licensed as a Payment Service Provider by the CBB, enabling fiat on/off-ramps and wallet services directly on Binance in Bahrain. Furthermore, in October 2024, the National Bank of Bahrain (NBB) launched the region’s first Bitcoin-linked structured investment product, designed for accredited investors and providing capital-protected exposure to Bitcoin. These moves underscore Bahrain's dedication to becoming a regional crypto hub through regulated innovation.

The Middle East and North Africa (MENA) region is experiencing a broader shift towards crypto maturity. The region received $338.7 billion in on-chain value from July 2023 to June 2024, accounting for about 7.5% of global crypto volume. Notably, 93% of this activity came from institutional investors, indicating growing trust and maturity in the crypto market. Bahrain's new stablecoin regulations are not just a legal update but a signal of intent to lead the next phase of crypto growth in the Gulf. If other countries in the region follow Bahrain's lead, the Middle East could become a key player in global crypto finance.