The Influence of Bitcoin in Bahrain's Financial Structure!
Bahrain Embraces Bitcoin and Cryptocurrencies: A Regulatory Overview
Bahrain, a long-standing hub for financial institutions in the Middle East, is exploring the potential of Bitcoin and other cryptocurrencies to revolutionise its financial industry.
Bitcoin, a digital currency that has gained prominence in various countries, offers several benefits for finance. Transactions with Bitcoin are secure, transparent, and fast, making it an attractive alternative to traditional banking methods. It also enables people to exchange goods and services without the need for a third-party intermediary like banks.
Moreover, Bitcoin offers lower fees for global transactions, which is advantageous, especially for small businesses that rely on international trade. Cryptocurrencies provide enhanced security against fraud or theft, and their potential advantages become clearer with continued development.
In 2019, the Central Bank of Bahrain (CBB) issued regulations that enabled businesses to accept Bitcoin payments as long as they comply with anti-money laundering and terrorism financing laws. This move marked a significant step towards integrating Bitcoin into the Bahraini financial system.
Some financial institutions in Bahrain are already exploring the potential of Bitcoin. For instance, BFC Group Holdings collaborated with BitPay in 2020 to facilitate Bitcoin transactions.
As of mid-2025, Bahrain recognises Bitcoin and other crypto-assets as part of its financial ecosystem but regulates them within a clear and progressive framework primarily focused on stablecoins rather than Bitcoin itself. The CBB has introduced a licensing and regulatory framework specifically for stablecoin issuers and custodians.
While Bitcoin trading and transactions operate within this broader regulatory environment, it does not have a separate dedicated licensing regime as of now. The emphasis is on stablecoins integration into the financial system through licensing, robust anti-money laundering (AML) and counter-terrorist financing (CTF) controls, and governance requirements to bolster transparency and investor confidence.
In summary, Bahrain’s government and its central bank take an active regulatory approach to digital assets, particularly stablecoins, by requiring licensing and compliance standards that foster innovation while containing risk. This approach positions Bahrain as a regional leader in crypto regulation by balancing innovation with risk management, with the CBB actively overseeing stablecoins as the first type of digital asset to be formally licensed and regulated in the kingdom.
Key Regulatory Points:
- Stablecoins regulated via licensing, permitted in BHD, USD, and approved fiats.
- Issuers must meet strict governance, transparency, and AML/CTF standards.
- Yield-bearing stablecoins allowed under controlled conditions to protect stability and issuer solvency.
- Bitcoin’s legal and regulatory status is acknowledged but more fluid, with potential changes over time noted by market participants.
[1] Central Bank of Bahrain (CBB) (2021). Guidance on Virtual Asset Service Providers. Retrieved from https://www.cbb.bh/en/guidance-on-virtual-asset-service-providers
[2] Central Bank of Bahrain (CBB) (2020). Consultative Document on Virtual Asset Service Providers. Retrieved from https://www.cbb.bh/en/consultative-document-on-virtual-asset-service-providers
[3] Central Bank of Bahrain (CBB) (2025). Regulatory Framework for Stablecoin Issuers and Custodians. Retrieved from https://www.cbb.bh/en/regulatory-framework-for-stablecoin-issuers-and-custodians
[4] Central Bank of Bahrain (CBB) (2025). Press Release: Central Bank of Bahrain Announces Regulatory Framework for Stablecoin Issuers and Custodians. Retrieved from https://www.cbb.bh/en/press-release-central-bank-of-bahrain-announces-regulatory-framework-for-stablecoin-issuers-and-custodians
[5] Central Bank of Bahrain (CBB) (2025). Statement by Governor of the Central Bank of Bahrain on the Regulatory Framework for Stablecoin Issuers and Custodians. Retrieved from https://www.cbb.bh/en/statement-by-governor-of-the-central-bank-of-bahrain-on-the-regulatory-framework-for-stablecoin-issuers-and-custodians
In the regulatory landscape of Bahrain, Bitcoin and other cryptocurrencies are recognized as part of the financial ecosystem, but the focus is primarily on stablecoins that are subject to licensing and robust anti-money laundering (AML) and counter-terrorist financing (CTF) controls. (Key Regulatory Points)
Financial institutions in Bahrain are increasingly engaging in investing and embracing Bitcoin and other cryptocurrencies, such as the collaboration between BFC Group Holdings and BitPay in 2020 to facilitate Bitcoin transactions. (In summary)
