CRYPTO-ASSETS REGULATORY UPDATE – AUGUST 2019
The Crypto Asset Module in Capital Markets volume introduced by the Central Bank of Bahrain (CBB) in February this year was amended in the month of April.
In this month’s regulatory update, we summarize the amendments in the Module issued by CBB and accordingly analyze the additional requirements for obtaining a license.
The legal status of a licensed crypto-asset service licensee under the updated module has been extended to a Bahraini company with limited liability (W.L.L) for undertaking Category-1, Category-2 and Category-3 regulated crypto-asset services.
A W.L.L is a legal entity separate from its owners. Up to 50 individuals or company founders can own such a company “With Limited Liability” but a minimum of two shareholders is required.
A W.L.L shall not undertake insurance or banking activities or fund investment for the account of third parties in general.
Ownership of a W.L.L can be 100% foreign – however, not all activities such a company can perform are permitted for 100% foreign ownership.
Also, for undertaking Category-4 regulated crypto-asset services (Licensed crypto-asset exchange) the legal status must be:
(i) A Bahraini joint stock company (B.S.C.); or (ii) A branch resident in Bahrain of a company incorporated under the laws of its territory of incorporation.
The requirement for payment of variable annual fees was mentioned as 0.25% of their relevant operating expenses. However, the law now includes a minimum and maximum fee which will be levied as per the table below:
|S. No.||Licensing Category||Minimum Fees (BD)||Maximum Fees (BD)|
Also, it clarifies that for new licensees the first annual license fee payable when the license is issued by the CBB is the minimum amount stipulated in the above-mentioned table for each category of license.
 CRA 2.1.1 of the Crypto Asset Module by CBB
 Article 261 (A) of Commercial Companies Law of Bahrain, 2001, as amended.
 Article 262 of Commercial Companies Law of Bahrain, 2001, as amended
 Article 261 (B) of Commercial Companies Law of Bahrain, 2001, as amended.
 CRA 1.6.3 of the Crypto Asset Module by CBB
This regulatory update was authored by Barkha Doshi (Associate) with inputs from Soumya George (Principal Associate).