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Bahrain Cracks Down on Cryptocurrency-Related Financial Crime
A New Era of Regulation
In a bid to regulate the growing use of cryptocurrencies in the kingdom, Bahrain’s Central Bank has issued new rules governing the issuance and trading of digital currencies. The regulations aim to prevent financial crimes such as money laundering and market manipulation.
The Central Bank of Bahrain (CBB) Directive outlines licensing requirements for businesses offering cryptocurrency-related services, including receipt and transmission of orders, execution of orders on behalf of clients, dealing on own account, portfolio management, crypto-asset custodian services, and investment advice. To operate in the kingdom, these businesses must obtain a license from the CBB.
What Activities are Regulated?
According to the Directive, regulated crypto-asset services include:
- Receipt and transmission of orders
- Execution of orders on behalf of clients
- Dealing on own account
- Portfolio management
- Crypto-asset custodian services
- Investment advice
Excluded Activities
The following activities are excluded from regulated crypto-asset services:
- Creation or administration of cryptocurrencies
- Development, dissemination, or use of software for creating or mining a cryptocurrency
- Loyalty programs
International Comparisons
While Bahrain’s regulations provide clarity on the use of cryptocurrencies in the kingdom, other countries continue to grapple with regulatory uncertainty. In some jurisdictions, such as India and Israel, regulatory frameworks are still evolving.
In contrast, Canada and the United States have relatively friendly policies towards cryptocurrency mining, which is seen as a legitimate business activity. However, many countries remain unclear on their stance towards crypto-related activities.
Seeking Guidance
For individuals and businesses seeking guidance on cryptocurrency-related matters, it’s essential to consult with experts who can provide insight into Bahrain’s regulations and international best practices.
Freeman Law offers comprehensive services related to digital currencies, tax planning, and tax compliance. Contact us now to schedule a consultation or call (214) 984-3410 to discuss your concerns about cryptocurrency and blockchain technology.
CBB Spokesperson Statement
“By regulating cryptocurrency-related activities, we aim to ensure that these services are operated in a safe and transparent manner, protecting both consumers and the financial system as a whole.”
The new regulations come into effect immediately, and businesses offering unlicensed cryptocurrency-related services risk facing penalties and fines. The CBB has also warned individuals and businesses to be cautious of scams and fraudulent activities related to cryptocurrencies.