Bahrain’s central bank has introduced a new regulatory module for stablecoins that sets clear rules on issuance, custody and reserves. The Central Bank of Bahrain rolled out the Stablecoin Issuance and Offering module today.
The move makes Bahrain the first country in the GCC to publish a dedicated stablecoin framework. The aim is to close regulatory gaps, protect users and make Bahrain an attractive base for digital finance firms.
New rules for stablecoins
The framework permits only fiat-backed tokens, and as the text says, “Only fiat-backed stablecoins are permitted under the framework, with pegs allowed to the Bahraini Dinar, US Dollar, or other fiat currencies explicitly approved by the CBB.”
The rules ban algorithmic and commodity-backed models that have failed elsewhere. Issuers must meet strict rules on reserves and custody.
Who can issue and what must they do?
Issuers will need a licence from the central bank before they can operate in or from Bahrain. They must hold reserves in high-quality, liquid assets.
The rules require regular external audits of those reserves. Companies must also show strong governance, clear risk controls and solid cybersecurity measures.
Also Read: Bank Of England Faces Backlash From Crypto Industry Over Strict Stablecoin Limits
Wider ecosystem oversight
The CBB extended its rules to service providers beyond issuers. “The framework extends oversight to the wider ecosystem, including custodians, wallet providers, and payment facilitators,” the document states.
Anti-money laundering and counter-terrorism financing checks are central to the regime. The CBB said it aligned the rules with global standards, referencing the FATF, the Financial Stability Board and the EU’s MiCA rules.
A push to attract firms
Bahrain framed the new rules as part of a wider plan to court fintech players. The country is offering incentives such as “full foreign ownership rights, tax advantages, and a clear licensing environment,” the announcement notes.
Officials hope such steps will draw startups and large institutions alike and reduce uncertainty for investors.
Regional context and competition
Analysts note the move comes as Gulf states compete for fintech business. The UAE and Saudi Arabia have also moved on to crypto rules. Bahrain’s policy aims to set a clear bar and give firms a predictable path to operate.
Regulators in other states will watch closely to judge whether the approach eases cross-border business or creates more friction.
Concerns for smaller firms
The CBB’s strict reserve and audit rules could raise costs. Smaller fintechs may struggle to meet the new standards. That in turn could favour larger, well-capitalised companies.
Observers say Bahrain will need to balance safety with access to avoid shutting out innovation.
Cross-border and coordination issues
Stablecoins are global by design, and Bahrain’s rules will only be fully effective if they mesh with rules elsewhere. The central bank acknowledged the need for international alignment, and so is the case everywhere across the globe, where stablecoins have become an important part of regulation.
The country plans to work with global bodies to keep rules compatible and to support cross-border use of compliant stablecoins.
A regulator’s view and next steps
The CBB said the rules aim to bring clarity and control to a fast-moving sector, and it said it will monitor implementation and update rules as needed.
The government also hopes the new rulebook will help attract over 50 potential digital asset firms that are reportedly in talks to set up in Bahrain.
If enforced well, the SIO module could make Bahrain a model for stablecoin oversight in the region. The challenge now is in the details, and regulators must show they can enforce the rules without stifling competition.
Also Read: Kazakhstan Approves Stablecoins Fees Payment At AIFC With Bybit As First Provider