MANAMA: Malaysia-based Belfrics Global is gearing up to open and operate a cryptocurrency exchange in Bahrain, which will be a first for the Mena region.This follows the cryptocurrency technology provider receiving a licence from the Central Bank of Bahrain (CBB) to try out the idea in the regulatory sandbox.
Launched in June last year, the sandbox works as a ring-fenced space akin to a lab within which new business models and products that combine finance with information and communications technology can be tried and tested without falling foul of regulations.
Belfrics sees Bahrain as a gateway to the $50 billion digital payment market in the Mena region and is in talks with central banks across Africa, Asia and Middle East.
“We are excited to receive this approval from the CBB as it provides access to a $50bn digital transaction market in the Mena region alone,” said Belfrics Group chairman and chief executive Praveen Kumar Vijayakumar.
“This is a first of many licences that we are targeting for 2018.”
He added, “Bahrain is an ideal region for us to showcase our cryptocurrency-based payment systems and with the help of CBB and other central banks, we will be able to implement our identity management solutions using the Belrium Blockchain pretty soon.”
Founded in 2014, Kuala Lumpur-based Belfrics operates exchanges in Singapore, India and Kenya and also provides point of sale and other payment technology to merchants wanting to accept cryptocurrency as a method of payment.
The exchange recently raised capital from the market by launching the initial coin offering for Belrium blockchain, which can propel exchanges and many blockchain-based businesses to comply with regulatory requirements of know your customer (KYC) and anti-money laundering (AML) compliance.
According to Belfrics’ chief operating officer Jabeer KM, the group was set to establish its KYC-based solution and exchange services in seven more countries this year and “the approval from CBB is a perfect start for the year”.
“We are also working closely with central banks in Africa, Middle East and Asia to regulate the cryptocurrency space using our innovative KYC-based blockchain, Belrium,” he added.
As part of its drive to become a fintech hub, Bahrain became an early adopter in the region starting with the sandbox framework, followed by the launch of innovative payment systems and an incubation and funding ecosystem for start-ups.
Last October saw the CBB announce a dedicated unit for fintech, assigning it responsibility of the sandbox, supervision of licensed companies’ activities and operations, including cloud computing, payment and settlement systems, and monitoring technical and regulatory developments in fintech.
Partnering the CBB in spearheading fintech is the Economic Development Board (EDB), a semi-autonomous agency formulating Bahrain’s future economic development strategy, whose chief executive Khalid Al Rumaihi has called the kingdom “a great testbed for innovative products due to its size and easy market access to the GCC.”
He also told delegates at the first-ever MIT Innovation Forum in Bahrain last September that Bahrain was open to experimentation with blockchain-based cryptocurrencies like Bitcoin within the sandbox and would consider issuing bonds via distributed ledger technology.
However, said Mr Al Rumaihi, all experiments would need to ensure adequate protection for consumers and prevent terrorism funding, money-laundering and illegal activities.
Upcoming initiatives by the EDB include a $100 million venture capital fund-of-funds.