- The Oman Capital Market Authority has announced its plans to release a new regulatory framework for digital assets.
- The CMA enlisted XReg Consulting Limited and a law firm to aid in the development of a comprehensive framework.
- Over 65000 Omanis hold cryptocurrency despite warnings from the Central Bank of Oman.
Oman’s financial markets regulator, the Capital Market Authority (CMA), is working to create a new regulatory framework for the Sultanate’s virtual asset business.
The passing of the proposed laws and framework would enforce the monitoring of virtual asset operations. It would bring digital currency issuance, token custodial services, initial coin offerings (ICOs), staking, and exchange services under the direct supervision of the CMA. The law will also introduce a new licensing mechanism for virtual asset service providers (VASPs) and a framework to detect and manage risks associated with the new asset class.
“This new regulation aims to establish a market regime for virtual assets that include rules to prevent market abuse, including [thorough] surveillance and enforcement mechanisms,” said the CMA in the press release.
According to the statement, the CMA also partnered with XReg Consulting Limited, a regulatory consultancy specializing in virtual assets, and an Omani legal company, Said Al-Shahry and Partners, for advice and assistance in the development of a comprehensive regulatory framework for digital assets in Oman.
Although the CMA revealed its plan to regulate the crypto industry, it did not specify when the rules would be enforced. Instead, it stated that the proposed regulations correspond with the Sultanate’s Vision 2040, which aims to digitally transform the financial sector and the country’s economy, all while attracting foreign investments into Oman.
Implementing this framework will add the Sultanate of Oman to the small group of countries that embraced the crypto industry and have enforced comprehensive frameworks to regulate digital assets instead of banning their use.
Despite the country’s vision to become the pioneer in adopting digital assets in the Gulf region and its population’s continued interest in digital currencies, the Central Bank of Oman continues to tread cautiously in matters concerning digital assets.
“Be Careful,” warns the CBO
The Central Bank of Oman (CBO) has always been skeptical about cryptocurrency and digital assets. In October 2022, the CBO warned its citizens of crypto-related fraud.
“Be cautious of using cryptocurrencies, as well as other deceptive investment schemes that offer huge profits (Ponzi Schemes)!” the CBO said.
The CBO has repeatedly warned that no firm has been licensed to trade cryptocurrencies in Oman and that currency banking regulations do not cover digital currencies or activities involving their use.
The warning, however, did not deter Omanis from keeping and investing in digital assets. According to a recent Souq Analyst study, around 65,000 persons, or 1.9% of the adult population, in the nation hold cryptocurrency. The report stated that 23% of those holding cryptocurrencies already used them for daily trading, while an additional 62% owned the assets for the long term. The rest stated that they only used digital assets for learning and education.
Holding its citizens back from crypto is problematic for Oman, considering the strides other countries in the Gulf have taken. For instance, the UAE has already initiated multiple innovation projects in the crypto industry. This includes the development of a comprehensive regulatory framework for Dubai and the ongoing experimentation in collaboration with Metaverse.
Moreover, some major blockchain technology companies already operate in the UAE to serve the broader Middle East. Aside from that, Saudi Arabia has recently collaborated with Sandbox, which indicates the possibility of moving into the Metaverse. On the other hand, Bahrain continues to follow the UAE’s lead in welcoming more global participants.
