Bank of Bahrain issues stablecoin regulatory framework for digital asset oversight
New rules mandate licensing, reserve backing, and investor safeguards for fiat-linked digital currencies
MANAMA, Bahrain (MNTV) — The Central Bank of Bahrain (CBB) has introduced a formal regulatory framework for the issuance and operation of stablecoins, becoming one of the first jurisdictions in the Middle East to do so.
The Stablecoin Issuance and Offering (SIO) Module, effective July 2025, is now integrated into Rulebook Volume 6, which governs crypto-asset services.
The framework focuses exclusively on fiat-backed stablecoins—digital assets that maintain a 1:1 peg with a single fiat currency. Algorithmic, commodity-backed, or multi-asset stablecoins are excluded under the new rules.
Only licensed Bahraini Joint Stock Companies (BSCs) are eligible to issue such stablecoins, provided they meet strict financial, governance, and operational standards.
Applicants must submit detailed documentation along with a BD100 non-refundable application fee. The CBB will decide on applications within 60 calendar days, as outlined in Articles 44–47 of the CBB Law.
Approved issuers must hold reserve assets equivalent to the total value of stablecoins in circulation.
These reserves must be stored with third-party custodians—such as licensed banks or investment firms—under formal agreements, ensuring both safety and transparency.
Key components of the SIO Module include eight licensing conditions covering incorporation, capital adequacy, and pre-launch operational readiness.
Redemption rules mandate that holders must be able to redeem stablecoins at par value within five business days. Issuers are also required to clearly publish their redemption policies and disclose any potential yield generated from reserve asset investments.
A non-technical whitepaper is compulsory for all issuers, explaining the features, risks, and backing of the stablecoin in plain language.
Marketing efforts must comply with transparency standards to ensure consumers make informed decisions.
The framework also introduces technology governance requirements, such as cybersecurity protocols, outage contingency planning, and operational resilience.
Stablecoins classified as “significant”—those with greater systemic exposure—will be subject to enhanced oversight.
This includes stricter reserve management, additional reporting obligations, and heightened prudential requirements.
The CBB retains the authority to impose penalties, including financial, administrative, and criminal sanctions, for violations of the framework. Licensees must also inform the regulator of any material changes to business operations or leadership.
The new framework marks a major step in Bahrain’s strategy to foster digital financial innovation while protecting consumers and maintaining financial stability.
By setting clear legal parameters, the CBB aims to create a secure environment for stablecoin adoption and position Bahrain as a regulatory leader in the region’s evolving digital asset landscape.
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