Saudi Arabia looks to blockchain gaming and Web3 to diversify economy

Saudi Arabia has ramped up its economic diversification efforts driven by its ambitious Vision 2030. 

In a bid to diversify its economy away from a dependence on oil, the kingdom has embraced emerging technologies, such as blockchain and artificial intelligence (AI), and tapped into booming markets like gaming.

But while the country has yet to leave a significant mark in the global game and AI development, the ripples of its investments in the gaming sector could extend far beyond — at least, that’s what Web3 experts say.

“Based on our work and communications that we have, Saudi [Arabia] is very, very interested in Web3,” Animoca Brands co-founder Yat Siu told Cointelegraph.

Given the kingdom’s partnerships with entities such as The Sandbox and even Animoca, Siu sees that there’s an effort from Saudi to venture into the new iteration of the internet. The executive said:

“I think Saudi [Arabia] understands the principle that Web3 gaming or blockchain gaming — the one that we actually prove the owner assets — is going to be the future of gaming.”

Thanks to the interest of its young, tech-savvy population, Saudi Arabia, along with the United Arab Emirates, is driving the growth of the Middle East’s gaming market. According to a Boston Consulting Group report, the kingdom represents 45% of the sector in the region, with a value of more than $1.8 billion. It also boasts one of the largest game revenues in the area, according to game content studio Allcorrect.

In 2017, the kingdom established the Saudi Esports Federation to regulate and develop the country’s gaming industry.

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Bloomberg reported in April that Saudi Arabia, through its Public Investment Fund, invested $38 billion in the sector as it looks to become a global gaming hub.

Although the Saudi government understands the “high-level concept” of Web3, its potential, and how it can align with esports — where teams can own stakes in games they play — Siu said it remains unclear what its integrations to gaming would be due to the absence of clear rules on cryptocurrency and other virtual assets:

“Cryptocurrency is something that is still to be explored. It’s being investigated. I think [Saudi Arabia is] quite forward about how to deal with it. But they haven’t come up with anything yet.” 

“In places like Hong Kong, Japan and the UAE, there’s much more clarity as to what you can do with crypto and Web3. You can map out a strategy,” Siu added.

While it remains to be seen what Saudi Arabia’s Web3 gaming applications would look like, Siu noted that the kingdom is looking at other markets and learning.

“That’s why they’re talking to us. Because they want to know what the best practices are and how they can learn,” the executive explained. “There are very few places in the world that we’ve seen such a hunger and desire to sort of be at the cutting edge.”

“You can feel sort of the desire to have progress and to lead in Saudi Arabia. I think that’s kind of unique,” Siu added.

How gaming can spur Web3 adoption

While pushback from the traditional gaming community and developers persists, Siu claims a successful conversion of users into Web3, whether it’s in gaming or not, should come with financial literacy.

“You can’t really be a true Web3 user if you don’t have at least a certain level of financial literacy that goes above and beyond having a bank account,” Siu said.

Gamers in Saudi Arabia. Source: Allcorrect game content studio

The Animoca co-founder claimed that most Web2 users are not capital investors because they’re mostly labor people compared to Web3 people who understand investing.

“What we found is that the path to Web3 mass adoption isn’t giving [Web2 users] just a wallet. That’s actually the easiest part. The harder part is how to make them aware that what they now have is an asset that has potential value, and it could do things and has different network effects that need to be maintained as real value.”

Meanwhile, Mythical Games CEO John Linden told Cointelegraph that he already sees Web3 adoption in the gaming sector, albeit at a slower pace.

“I think we’re seeing some [adoption] already. We’re seeing people that they’re introducing the [Web3] concept. They do understand the concept of buying and selling assets,” Linden said.

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The gaming industry veteran pointed out that Web3 should enhance user experience and not just give them the means to generate income:

“[Web3 gaming developers] have to focus on new game models. When you start doing that, it introduces creator economy, digital supply chain, ownership of guilds and the ability to come up with your own theory within the game itself.”

“Those are principles I think gamers will attach to,” Linden added.

The Mythical Games CEO projects that the Web3 gaming segment could onboard 50 to 100 million players in the next two years, with their own titles targeting 10 million by the end of 2023.

Abu Dhabi grants virtual asset firm M2 permission to offer crypto services

The Financial Services Regulatory Authority (FSRA) of the Abu Dhabi Global Market (ADGM) has granted financial services permission (FSP) to virtual assets firm M2 to operate a multilateral trading facility from the United Arab Emirates capital.

In an Aug. 16 announcement, the Abu Dhabi-headquartered M2 said the regulatory approval would allow institutional and retail clients in the UAE to “buy, sell and custody virtual assets,” such as Bitcoin (BTC) and Ethereum (ETH).

The M2 platform, which is scheduled to launch later in 2023, has been developed over the past year with a long-term vision to establish “the highest levels of trust, security and integrity in the emerging virtual asset class,” the announcement said.

Once live, the M2 platform will also allow UAE users to buy cryptocurrencies using fiat money, as well as access to derivatives and yield services.

“The process of obtaining the license is the first step on our journey, and we will remain in close dialogue with ADGM to ensure transparency around the custody of client assets,” said Stefan Kimmil, chief executive of M2.

Cointelegraph reached out to M2 for further comments but didn’t receive an immediate response.

“Over the past five years, the ADGM regulatory framework has established clear rules for those operating in the virtual assets sector, and M2 will uphold the highest standards to reflect their vision as the UAE continues to affirm its reputation as a global leader in this space,” he added.

Related: Uzbekistan permits two banks to issue crypto cards

ADGM had not yet responded to Cointelegraph’s request for comment at the time of publication.

ADGM introduced a comprehensive virtual asset regulatory framework in 2018. It has since attracted a number of major companies dealing with cryptocurrencies to set up businesses in its regulated financial economic zone.

“At ADGM, our mission has always been centered around unlocking new growth opportunities and fostering investments in the virtual asset sector, ADGM Authority CEO Salem Al Darei said. “We remain committed to enhancing Abu Dhabi’s digital asset landscape and actively supporting the diversification of our thriving economy.”

In November 2022, the ADGM awarded cryptocurrency exchange Binance an FSP after being granted in-principle approval from the financial watchdog in April.

Subsequently, cryptocurrency exchange Rain received similar regulatory permission in July this year to operate virtual assets brokerage and custody services to UAE users.

Oman financial regulator seeks feedback on proposed virtual asset framework

The Sultanate of Oman is inching closer to launching its own virtual asset regulations, with its financial markets regulator seeking public comments on its proposed regulatory framework governing digital assets, such as cryptocurrencies.

The Capital Market Authority of Oman is currently in the process of drafting a comprehensive regime for the virtual asset sector, which includes various business requirements and market abuse prevention, it said in the consultation paper published on July 27.

“The CMA is seeking to provide an alternative financing and investment platform for issuers and investors while mitigating the risks associated with the [virtual asset] class.”

The consultation paper includes 26 questions, with which industry stakeholders could provide their opinion. It includes proposals on regulatory and licensing requirements for virtual asset service providers (VASPs), corporate governance, risk management and virtual asset issuance.

It revealed that the proposed framework encompasses utility tokens, security tokens, fiat-backed and asset-backed stablecoins, and other digital currencies that fall under the Financial Action Task Force’s definition of virtual assets. However, the issuance of privacy coins might get banned, pending public feedback.

Related: UAE emerges as a pro-Bitcoin mining destination in the Middle East

The CMA might also require VASPs to establish a local presence in Oman through a legally established entity and physical office and impose minimum capital requirements on them. If finalized, virtual asset firms might also be required to hold only a low percentage of assets in hot wallets, conduct audits of safeguarded assets and show proof of reserves.

The public must submit their feedback to the consultation paper by Aug. 17, with key opinions potentially getting posted on the CMA website.

Following the consultation phase of the development of the virtual asset regime, the CMA will draft and finalize the regulatory framework.

Although the CMA publicly announced launching a regulatory framework on Feb. 14, discussions on regulating the virtual asset industry in Oman began much earlier. In November 2020, the country’s National Committee for Combating Money Laundering and Terrorist Financing decided to launch a task force comprising CMA and Central Bank of Oman officials to study whether to ban or permit virtual asset activities. Consultants were then enlisted in December 2022 to assist in setting up the new regime.

Nomura’s crypto arm Laser Digital bags Dubai VARA license

The crypto arm of Nomura has obtained an operating license from Dubai’s Virtual Asset Regulatory Authority (VARA) amid the Japanese financial holding’s attempts to leave its mark in the digital asset space.

Laser Digital Middle East FZE, Nomura’s Dubai-based digital asset subsidiary, announced on Aug. 1 that the new virtual asset service provider (VASP) license would allow it to offer broker-dealer and virtual asset management and investment services in the emirate.

Additionally, the permit allows the firm to conduct trading and asset management operations in the coming months, including over-the-counter (OTC) services and a “range of digital asset investment products and solutions,” the announcement said.

“VARA’s thorough and consultative process provides institutional investors with the assurance they require to engage in this asset class, said Jez Mohideen, chief executive of Laser Digital. “With the license now in place, we are looking forward to Laser’s growth over the coming years.”

Laser Digital and VARA haven’t responded to Cointelegraph’s request for further comments at press time.

Founded in September 2022 by Nomura, Laser Digital was the brainchild of Steven Ashley, the former head of Nomura’s wholesale division, along with Mohideen, who served as the holding’s former chief digital officer and co-head of global markets for Europe, Middle East and Africa. It’s headquartered in Switzerland and has offices in Dubai and London.

Related: Bybit’s MVP license in Dubai ‘very restricted,’ CEO says

Dubai’s growing crypto ecosystem has attracted global attention, having established its own virtual assets rules and regulatory body in March 2022. In February, the emirate’s virtual asset regulator issued its “Full Market Product Regulations,” which include four compulsory rulebooks and activity-specific rulebooks that lay down the rules for VASPS.

Laser Digital’s new license comes on the heels of Binance reaching another milestone in cementing its foothold in the United Arab Emirates. On July 31, Binance’s Dubai subsidiary, Binance FZE, obtained an operational minimum viable product (MVP) from VARA to operate cryptocurrency exchange and virtual asset broker-dealer services locally.

Aside from Binance, digital asset custodians Komainu MEA and Hex Trust MENA FZE are the only holders of operational MVP permits. Crypto exchange BitOasis, which also secured the same conditional license, had its permit suspended by VARA for not meeting mandated conditions.

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Kenya partners with Abu Dhabi’s Venom Foundation to build blockchain, Web3 hub

The partnership will attempt to contribute to driving blockchain innovation in the continent’s key sectors, including finance, supply chain, agriculture, business and cross-border trade, the May 10 announcement said.

The planned blockchain and Web3 hub will serve as a central platform for African technology companies and government entities, fostering knowledge exchange and stakeholder collaboration.

Under the deal, Venom will provide tools and resources to support Kenya and other African countries in their digital transformation, including blockchain-based solutions for supply chain management, land registry, voting systems and asset tokenization.

Moses Kuria, Kenya’s Cabinet Secretary for Investments, Trade and Industry, said that the deal shows the country’s stance toward next-generation technology. He added:

“We believe that the establishment of this blockchain hub will catalyze further innovations in various industries, benefitting our people both nationally and globally.”

Kenya and wider Africa continue to become a hotbed for innovation, including the implementation of blockchain technology. The continent witnessed a 429% increase in blockchain deals, as companies raised $474 million last year from $90 million in 2021, data from CV VC shows. The data added that those numbers surpassed the global funding average, which only grew by 4%.

“Africa is already rich in natural resources and human capital,” Venom Foundation CTO Christopher Louis Tsu said. “By bringing next-generation blockchain technology to the continent, it will empower the people and help not only Kenya but many other African nations to capitalize on their assets and participate in new global markets competitively.”

Related: Web3 economy to gain more traction in Africa through DeFi-based financial inclusion

In January, Venom Foundation, with investment manager Iceberg Capital, announced a $1 billion fund for Web3 and blockchain firms. The investment fund will look to attract technology firms to use Venom’s scalable, proof-of-stake-based blockchain solution.

Elsewhere, lawmakers in Kenya have introduced Finance Bill 2023, which seeks to tax crypto and nonfungible token (NFT) transfers. The proposal, which will undergo five rounds of readings, would require registered crypto exchanges and NFT marketplaces to deduct 3% of the transfers’ value to be paid to the government.

The Kenyan government has inked a deal with Abu Dhabi-based blockchain platform Venom Foundation to launch a blockchain and Web3 hub in Africa. 

CertiK, zkSync to launch compensation plan for $2M Merlin DEX exploit

Blockchain security firm CertiK is launching a compensation plan with Ethereum layer-2 scaling platform zkSync Era to cover the $2 million lost during a public sale of decentralized exchange Merlin’s MAGE tokens.

In a statement to Cointelegraph on April 26, CertiK reiterated it is investigating the exit scam and has also enlisted the remaining Merlin team to initiate the compensation plan. It said:

“Initial investigations indicate that the rogue developers are based in Europe, and CertiK will collaborate with law enforcement authorities to track them down if direct negotiation is unsuccessful.”

The blockchain security company is urging the rogue developer to return 80% of the stolen funds, conceding 20% as a white hat bounty.

The firm also pointed out that private key privileges are “committed to assisting impacted users” despite them being outside the scope of a smart contract audit.

Merlin lost about $850,000 worth of USD Coin (USDC) and some more relatively illiquid tokens on April 26 during its three-day MAGE tokens public sale without any hard cap. Blockchain data suggests that an exploiter with control over the liquidity pool was able to easily siphon the funds.

CertiK, which audited Merlin’s code, responded with its initial findings pointing to a “potential private key management issue.”

Crypto Twitter questioned the CertiK audit, implying that there might be a rug pull.

Verichains founder Thanh Nguyen alluded to a “backdoor” present in Merlin’s code, saying it is a “clear security risk as there is no use case that requires its approval.”

“While audits can identify potential risks and vulnerabilities, they cannot prevent malicious activities on the part of rogue developers such as rug pulls,” CertiK in a statement to Cointelegraph. “We encourage users to look for projects with a ‘KYC Badge’ as an added layer of security, signifying that the project has voluntarily gone through a KYC vetting process.”

Related: Ordinals Finance has conducted a $1M rug pull: CertiK

The firm explained that doing so can help reduce and mitigate the risk of insider threats such as rug pulls.

CertiK said it would continue providing updates on its compensation plan and ongoing investigation.

Dubai regulator demands Binance provide info on ownership, governance: Report

The Virtual Assets Regulatory Authority (VARA), the entity that oversees crypto activities in Dubai, has asked Binance to provide more information about its business requirements in its efforts to tighten regulatory guardrails in the emirate, Bloomberg reported.

Citing three anonymous sources, Bloomberg reported on April 5 that the regulator had asked Binance to submit more information about the exchange’s ownership structure, governance and auditing processes. The people close to the matter said VARA has requested the same details from global crypto players looking to be licensed in Dubai.

VARA officials have also required Binance to provide similar information, on top of board procedures, at its global group level, with queries taking longer to address given the exchange’s size and complexity, two of the sources said.

The increased scrutiny over virtual assets service providers (VASPs) in Dubai adds to Binance’s woes as it faces more pressure from regulators in the United States.

Last week, the United States Commodity Futures Trading Commission (CFTC) filed a lawsuit against Binance and its CEO, Changpeng Zhao, alleging that the exchange engaged in improper compliance procedures and trading.

Zhao has since rejected the claims, calling them “an incomplete recitation of facts,” and that Binance “does not trade for profit or ‘manipulate’ the market.”

Binance received a preparatory minimal viable product (MVP) license from VARA in September last year. The permit allows the platform to set up an office in the United Arab Emirates and provide digital asset exchange services to pre-qualified investors. However, the company can’t yet offer locally regulated digital asset services in the emirate.

The largest crypto exchange by trading volume would need to submit the necessary requirements to VARA to upgrade to an operational MVP license, which would allow it to offer its services to qualified individual and institutional investors, before securing a full market product permit.

Related: Groceries to luxury cars: The state of crypto adoption in Dubai

Currently, only digital asset custodian Hex Trust has secured an operational MVP license from the Dubai regulator.

According to VARA’s website, VASPs already providing their services must comply with their requirements before the end of June.

Sygnum sees increased crypto firm inquiries after US banking giants collapse

Zurich-based digital asset bank Sygnum is seeing an influx in inquiries from international crypto firms looking for new banking partners following the recent collapses of crypto-friendly banking giants in the United States.

Dominic Castley, chief marketing officer at Sygnum, told Cointelegraph in an email that they are receiving more onboarding inquiries from crypto firms based in various jurisdictions looking to bank with them. He explained:

“Over the past weeks, as the current banking industry events have unfolded, we have seen a significant increase in onboarding inquiries from various international locations, including a number from the UAE and the Middle East.”

Castley added that the new onboarding inquiries are mainly coming from investors, asset managers and blockchain projects looking to diversify their crypto investments. He explained that the Swiss bank is putting additional effort into scaling its client service support and compliance teams “to welcome these new clients in a speedy but fully compliant manner.”

Signature Bank, Silvergate Capital and Silicon Valley Bank experienced a meltdown in March, leaving U.S. crypto firms scrambling for institutions to do business with.

Although the recent events have resulted in an opportune moment for the Swiss bank to partner with new clients, Castley said that they would stick to their policy to not take on U.S. clients.

“Sygnum took the decision to not service U.S. clients at inception back in 2017 to enable full focus on our core target markets,” Castley wrote. “It has been a founding policy ever since, and as a result, we do not onboard any U.S. persons or entities as clients.”

Related: Bitcoin’s banking crisis surge will ‘attract more institutions’: ARK’s Cathie Wood

Amid the increase in entities interested in banking with Sygnum, Castley said the firm attributes this to its dual Swiss and Singapore locations and strategy to be fully regulated in these respective jurisdictions.

Sygnum recently announced that it is opening its Middle East hub for Swiss-regulated crypto banking services in the Abu Dhabi Global Market (ADGM) after securing financial services permission from the Financial Services Regulatory Authority (FSRA).

Following Sygnum’s expansion efforts into the Middle East, the Swiss digital asset bank now looks to position itself in another jurisdiction that is also welcoming toward cryptocurrency. Aside from Abu Dhabi and Singapore, it has licensed operations in Luxembourg.

Related: Unstablecoins: Depegging, bank runs and other risks loom

The UAE central bank signs deal for CBDC strategy

The Central Bank of the UAE (CBUAE) is inching closer to fully launching its central bank digital currency (CBDC), the ‘Digital Dirham’, for domestic and cross-border payments.

According to an announcement on March 23, the CBUAE signed an agreement with Abu Dhabi’s G42 Cloud and digital finance services provider R3 to be the infrastructure and technology providers of the CBDC implementation.

In addition to addressing the challenges of domestic and cross-border payments,  it will also help boost financial inclusion as the country looks to become a “cashless society.”

The first phase of the CBDC strategy consists of the soft launch of “mBridge” which facilitates CBDC transactions for international trades, along with proof-of-concept works for bilateral CBDC bridges with India and domestic CBDC issuance for wholesale and retail. This stage is expected to be completed in the next 12 to 15 months, the announcement said.

During the initial unveiling of the strategy on Feb. 12, the CBUAE governor Khaled Mohamed Balama noted:

“The launch of our CBDC strategy marks a key step in the evolution of money and payments in the country. CBDC will accelerate our digitalization journey and promote financial inclusion.”

While the UAE looks to push the boundaries of CBDC use cases, debates over the asset’s viability in the United States continue.

Related: India, UAE to explore CBDC bridge to facilitate trade, remittances without USD

On March 21, Republican Senator Ted Cruz introduced a bill to block the United States Federal Reserve from issuing a “direct-to-consumer” CBDC over fears of it becoming a spying tool.

Meanwhile, a study released by a division of the U.S. Treasury claimed that integrating a CBDC into the economy would destabilize banks, calling the harm it could cause to banking “significant” in times of stress.

Nigeria on the other hand is witnessing increased adoption of its eNaira, as its fiat currency faces severe shortages. The total number of CBDC wallets in Nigeria sits at 13 million, growing more than 12 times compared to the numbers in October 2022.

As of March, 114 countries, representing over 95% of the global GDP, are exploring CBDCs. 65 nations are already in advanced stages, according to the US-based think tank Atlantic Council.

UAE free zone to explore Bitcoin payments for services, lawyer says

Ras Al Khaimah’s recently announced free zone for virtual asset firms will explore accepting crypto payments from companies looking into setting up their businesses in the emirate, a lawyer involved in the hub’s development said.

Dubai-based crypto lawyer Irina Heaver told Cointelegraph that once the Ras Al Khaimah Digital Assets Oasis (RAK DAO) secures the appropriate partners, it will check out crypto payments, including Bitcoin (BTC) and other stablecoins, for corporate registrations, office rent and other services. “After all, cities and cantons in Switzerland have been doing this for years,” she noted.

Heaver further explained that suitable technology and regulatory infrastructure need to be in place for the system to work, but clarified that the “groundwork has been laid.” In addition, the lawyer also said that RAK DAO would explore operating full Bitcoin and lightning nodes to support the crypto payment initiative. She added:

“Works are ongoing in this regard, and we welcome technology partners to join us in this journey.”

RAK DAO, first unveiled during Blockchain Life 2023, would be a dedicated free zone for digital and virtual assets service providers involved in the metaverse, blockchain, utility tokens, digital wallets, NFTs, DAOs, dApps and other Web3-related businesses.

Heaver said that the new free zone aims to foster regulated and non-regulated activities, disclosing that RAK DAO is exploring “creating the right legal wrapper for DAOs,” among other things.

Related: UAE emirate to launch a free zone for digital and virtual asset firms

The new free zone will also serve the “entire chain of companies in the virtual assets space,” Heaver explained. “Whereas other free zones can only support segments of the industry, allowing very limited activities.” She added:

“I have to structure multiple entities in multiple jurisdictions. This adds to costs and time and is counterproductive for entrepreneurs. Now, I see a great opportunity for founders to base their businesses in one location.”

The United Arab Emirates has over 40 free zones, including the Dubai Multi Commodities Centre (DMCC) and Dubai International Financial Centre (DIFC).

As living and business costs in Ras Al Khaimah are 50% less than in Dubai, Heaver said the emirate’s free zone would be a “great point for startup companies.”

The government will also assist virtual asset service providers (VASPs) with banking requirements through its own entities and relationships, the lawyer said.

Emirate to launch free zone for digital and virtual asset firms

Ras Al Khaimah, one of the seven emirates that make up the UAE, is set to launch a free zone for digital and virtual asset companies as the country’s approach to the industry continues to attract global crypto players.

The RAK Digital Assets Oasis (RAK DAO) will be a “purpose-built, innovation-enabling free zone for non-regulated activities in the virtual assets sector.” Applications will open in the second quarter of 2023, the statement said.

The free zone would be dedicated to digital and virtual assets service providers in emerging technologies, such as the metaverse, blockchain, utility tokens, virtual asset wallets, NFTs, DAOs, dApps and other Web3-related businesses.

“We are building the free zone of the future for companies of the future,” said Sheikh Mohammed bin Humaid bin Abdullah Al Qasimi, chairman of RAK ICC, the operator of the new free zone. “As the world’s first free zone solely dedicated to digital and virtual asset companies, we look forward to supporting the ambitions of entrepreneurs from around the world.”

Free zones or free-trade zones are areas where entrepreneurs have 100% ownership of their businesses and have their own tax schemes and regulatory frameworks, with the exception of the UAE’s criminal law.

Drawing up what the new free zone’s steps would be, Dubai-based crypto lawyer Irina Heaver thinks “RAK DAO will start with non-financial activities first, then may introduce the financial activities at a later stage.” She added:

“[Entrepreneurs] won’t be able to launch a crypto exchange just yet, which is an ESCA-regulated financial activity.”

The Securities and Commodities Authority (SCA) is one of the UAE’s main financial regulators. According to the country’s latest federal-level virtual assets law, the SCA has authority throughout the Emirates, except for the financial free zones — the ADGM and DIFC, which have their own financial regulators.

The new free zone adds to the more than 40 multidisciplinary free zones in the country that have attracted numerous crypto, blockchain and Web3 firms, including the Dubai Multi Commodities Centre (DMCC), Dubai International Financial Centre (DIFC), Abu Dhabi Global Market (ADGM).

The UAE has painted itself as a forward-thinking hub for crypto firms eyeing jurisdictions with friendlier regulations. In March last year, Dubai unveiled its virtual assets law, along with the Virtual Asset Regulatory Authority (VARA), to protect investors and provide standards for the digital asset industry.

In September, the Financial Services Regulatory Authority, the regulator of the ADGM, published its guiding principles on its approach to regulating and overseeing the new asset class and its service providers.

Oman to establish regulatory framework for virtual assets

The Capital Market Authority (CMA), the regulator of Oman’s financial markets, looks to establish a new regulatory framework for the virtual asset industry in the Sultanate.

According to a Feb. 14 press release, the new rules would include oversight of virtual asset activities, a licensing process for virtual asset service providers (VASPs), and a framework to identify and mitigate risks surrounding the new asset class. The announcement reads:

“The aim of this new regulation is to establish a market regime for virtual assets that include rules to prevent market abuse, including [thorough] surveillance and enforcement mechanisms.”

Several virtual asset activities under the proposed guidelines include issuing crypto assets, tokens, crypto exchange products and services and initial coin offerings, among others.

XReg Consulting Limited, a virtual assets policy and regulatory consultant, and Said Al-Shahry and Partners, Advocates & Legal Consultants (SASLO), an Omani law firm, were enlisted to advise and assist CMA in drafting the new regulation.

The financial markets regulators said the proposed regulatory framework aligns with Oman’s Vision 2040, an initiative to digitally transform the country’s economy while attracting global players into Oman.

While Oman looks to position itself as a leader in virtual asset adoption in the Middle East through the proposed regulatory oversight, the country’s central bank appears to be warier when it comes to cryptocurrencies.

Related: UAE central bank to issue CBDC as part of its financial transformation program

In October, the Central Bank of Oman (CBO) urged citizens to exercise caution when transacting with cryptocurrencies, given the risks of fraud around the asset.

In repeated advisories, CBO warned it has yet to license any entity to trade in cryptocurrencies in Oman and that currency banking laws do not cover any digital or virtual currencies and activities involving their use.

However, the warning did not stop Omanis from holding and investing in the asset. According to the recent Souq Analyst survey, about 65,000 residents, or 1.9% of the adult population, own cryptocurrencies in the country.

The study found that 62% of locals own crypto for the long term, while 25% said they use digital assets for learning and education. The rest said they use cryptocurrencies for daily trading.