Framework ‘new era of legitimacy’ for stablecoins in Bahrain

The new Stablecoin Issuance and Offering (SIO) module (131-page / 1.66MB PDF) of the CBB rulebook regulates the issuance, offering, management, safeguarding and custody of stablecoins and reserve assets.

Stablecoins are a form of digital assets that purport to maintain a stable value relative to a fiat currency by holding assets, which may be of variable value, as backing. Under the new rules, the CBB now permits the issuance of fiat-backed stablecoins denominated in Bahraini dinar, US dollar and other fiat currencies approved by the CBB. 

Marie Chowdhry, an expert in fintech and financial regulation at Pinsent Masons, said: “The framework allows both stablecoin issuers and custodians to obtain official licenses, signalling a new era of legitimacy and regulatory clarity for the sector.”

“Bahrain’s stablecoin rules are among the most clearly defined in the GCC, offering a standalone centralised regulatory framework for stablecoins under the direct oversight of its central bank, providing clear guidance and reducing regulatory fragmentation for market participants,” she said. 

“The framework is supported by a regulatory sandbox and structured licensing process, enabling innovation without compromising regulation.”

Existing CBB-licensed entities must obtain the CBB’s written approval before launching any stablecoin-related services, submitting detailed operational plans and resource requirements.

“The framework clearly outlines licensing paths for issuers, custodians, wallet providers, and payment facilitators, enabling firms to operate with clarity and compliance,” Chowdhry said.

“Bahrain’s framework incorporates international best practice from the EU’s Markets in Crypto-Assets Regulation (MiCA), the Financial Action Task Force, Financial Stability Board (FSB), and NIS, ensuring interoperability and institutional confidence.”

Lana Akkad, an expert in financial regulation at Pinsent Masons, said: “Designed in line with international standards, Bahrain’s new framework allows stablecoin issuers and service providers to operate with clarity and legal certainty, locally and internationally.”

“With clear guidelines of the CBB and the support of Bahrain FinTech Bay, Bahrain is positioning itself as a trusted and well-regulated hub for digital finance in the region. We recommend that all entities currently operating or are looking to use stablecoins to assess their proposed operations in line with the new rules in order to ensure compliance with the CBB’s requirements,” she said.