Bahrain’s Central Bank Set to Test a Crypto Payment Solution:
The Central Bank of Bahrain (CBB) has announced its plans to test out a bitcoin payment solution with OpenNode, a crypto payment processor. The test is expected to be carried out through the bank’s regulatory sandbox. The Central Bank created the regulatory sandbox in 2017 with the aim that the sandbox will help the country’s fintech firms test and develop their products. The bank further enhanced the sandbox in 2021 to expand product testing support. The CBB has authorised Open Node to test its payment product through the sandbox.
Open Node’s payment infrastructure
Open Node’s payment infrastructure is Bahrain’s first crypto payment solution. According to Open Node, its payment infrastructure will enhance Bahrain’s economy and position the country for growth in its crypto ecosystem. Commenting on the product trials, Open Node’s CEO, Adnan Rahman, stated that the trials set the tone for Open Node’s utility within Bahrain and the broader Middle East. Dalal Buhejji, the Director of Bahrain’s Economic Development Board, has tried to adopt a flexible approach toward fintech regulation, which has helped increase the country’s technology sector. He also stated that Open Node’s testing would help further gear innovations in the fintech sector.
What this Crypto Solution means for Bahrain
Bahrain has always had a receptive disposition towards crypto. Earlier this year, the country was named a global crypto hub. This tag was due to Bahrain’s efforts to boost its crypto sector by implementing beneficial policies. Not long after, the country issued a license to Binance, the world’s largest crypto trading platform. The license authorised Binance to function as a crypto asset provider in Bahrain. The Central Bank of Bahrain also released a comprehensive legal framework governing the conduct of crypto services within the country. While Bahrain has been implementing significant oversight to prevent fraud in the crypto industry, it has found a way to successfully balance this oversight in a way that ensures the industry is not over-regulated.
Open Node’s product is not the first crypto product tested through the CBB’s regulatory sandbox. In 2019, Bahrain authorised a Shariah-compliant crypto exchange, Rain, to be tested through the sandbox. While every fintech firm (licensed or unlicensed) is allowed to go through the sandbox, applicants must fulfil specific eligibility standards to utilise the sandbox. The most crucial standard is that prospective sandbox participants have to prove to the CBB that their solution is innovative and currently does not exist in Bahrain.
Ultimately, Bahrain’s provision of a fintech-focused regulatory sandbox could help strengthen the country’s tech economy. It could also help cement Bahrain’s position as a significant global player in the crypto industry. With these moves, Bahrain joins the bandwagon of Middle Eastern countries seeking to prepare their economies for the future. Dubai has also adopted policies to strengthen its robotics and metaverse expertise.
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