Bahrain’s central bank is drafting regulations on stablecoin issuance, the Middle Eastern country’s Finance and National Economy Minister Shaikh Salman bin Khalifa Al Khalifa recently disclosed. Once enacted, the stablecoins are expected to reduce transaction costs and expand financial access.

According to an Akhbar-Alkhaleej report, Al Khalifa made the disclosure while responding to a question from legislator Hisham Al-Asheeri regarding digital asset regulation. Al Khalifa explained that the Central Bank of Bahrain has always been eager to make the digital asset space safer for residents.

“The Central Bank, as the regulatory body concerned with the financial sector, has been keen to enact laws and legislations concerned with regulating services related to crypto assets to provide a safe investment environment subject to the highest standards of oversight, in order to reduce the risks of trading through external platforms that are not subject to oversight and the possibility of their association with money laundering, fraud, and other issues,” the minister explained.

Recognized as a crypto-friendly nation a few years ago, Bahrain has issued licenses to cryptocurrency exchanges, including Coinmena and Binance. Bahrain’s licensing and embrace of digital assets have enabled companies like telecom operator Stc Bahrain to accept cryptocurrencies. Critics, however, argue that without an effective regulatory regime, more companies may be reluctant to accept cryptocurrencies and stablecoins.

To address these and other concerns, Al Khalifa said the envisaged legislation would empower the central bank to monitor activities and transactions conducted by licensees using a blockchain-based transaction tracking tool. If licensed crypto entities violate the proposed laws, the central bank may impose administrative fines, stop the licensee from providing services, or even impose criminal penalties.

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