Bahrain’s Central Bank authorizes U.K’s Fasset to test blockchain-based solutions
The Central Bank of Bahrain today authorized U.K-based Fintech firm, Fasset, to begin testing the tokenization of hard assets in Bahrain’s regulatory sandbox, according to a press release shared with AMBCrypto.
The firm has so far raised around $4.7 million in a pre-seed round from “strategic backers” in the UAE, Saudi Arabia, Bahrain, Kuwait, and Singapore.
The announcement comes on the back of Fasset announcing the roll-out of its flagship crypto-exchange, FEX, in Bahrain next year, with the announcement also stating that it will be open to investors from Kuwait, Oman, Qatar, Saudi Arabia, and the UAE. The announcement, however, did not expand on whether Fasset would acquire any additional permits.
Traditionally, the region mandates these platforms acquire a certification from the Bahrain-based Shariya Review Bureau (SRB), a certification that allows firms to abide by the tenets of Islamic law (that do not permit gambling and taking interest on loans, among others.) While this may seem like an additional, and maybe even an unnecessary step to outsiders, the certification is seen as an advantage in the region since it allows firms to unlock a network of investors observant of Islamic financial policies.
In fact, according to a 2017 study by the Malaysia International Islamic Financial Center, investments from networks that adhere to Sharia are said to be worth more than $70 billion. Algorand‘s network, for instance, has already acquired the said Sharia certification to operate in Bahrain.
While local laws in the Gulf have contributed to cryptocurrency trades being restricted, like Bahrain, the UAE and Saudi Arabia are also focusing on adopting blockchain tech. This could stem from the fact that the region is home to a huge number of expats that hail from developing markets, a demographic observation that might be motivating the Gulf to take on blockchain tech to expand on remittances.
For instance, UAE-based retail bank, RAKBank, adopted Ripple’s blockchain tech to widen its remittance routes to provide quick cross-border payments to India and Bangladesh. Meanwhile, Chainanalysis had reported that the Saudi Arabian Monetary Authority (SAMA), Saudi Arabia’s central bank, “has conducted several blockchain initiatives,” including using blockchain technology to “deposit funds to local banks.”
With the launch of FEX and its entry to Bahrain’s regulatory sandbox, the firm may soon compete with another crypto-exchange, Rain, with the latter already operating in the Kingdom with a full license from the central bank.
The most recent development is only evidence of the Gulf embracing blockchain tech.