The Capital Market Authority of Oman is making progress towards implementing its own regulations for virtual assets, such as cryptocurrencies. The financial markets regulator has released a consultation paper seeking public comments on its proposed regulatory framework, which covers various business requirements and market abuse prevention.
According to the consultation paper published on July 27, the Capital Market Authority (CMA) of Oman is currently in the process of drafting a comprehensive regime for the virtual asset sector. The aim is to provide an alternative financing and investment platform for issuers and investors, while also mitigating the risks associated with virtual assets.
The consultation paper includes 26 questions for industry stakeholders to provide their opinions on. It addresses regulatory and licensing requirements for virtual asset service providers (VASPs), corporate governance, risk management, and virtual asset issuance. The proposed framework covers utility tokens, security tokens, fiat-backed and asset-backed stablecoins, as well as other digital currencies within the Financial Action Task Force’s definition of virtual assets.
However, the issuance of privacy coins may potentially be banned, depending on public feedback. The CMA is currently seeking input from the public, who have until August 17 to submit their feedback on the consultation paper. Key opinions and feedback may be published on the CMA website.
If finalized, virtual asset firms may be required to establish a local presence in Oman through a legally established entity and physical office. They may also be subject to minimum capital requirements. Additionally, they might be required to hold only a low percentage of assets in hot wallets, conduct audits of safeguarded assets, and provide proof of reserves.
Once the consultation phase is completed, the CMA will proceed to drafting and finalizing the regulatory framework for virtual assets in Oman. It is worth noting that discussions on regulating the virtual asset industry in Oman began long before the announcement of the regulatory framework in February 2023. In November 2020, the National Committee for Combating Money Laundering and Terrorist Financing in Oman established a task force comprising officials from the CMA and the Central Bank of Oman to study the possibility of banning or permitting virtual asset activities. Consultants were brought in to assist in establishing the new regime in December 2022.
The efforts to develop virtual asset regulations in Oman reflect the growing recognition and interest in the cryptocurrency and blockchain industry in the Middle East. The United Arab Emirates has emerged as a pro-Bitcoin mining destination in the region, indicating a wider trend towards embracing digital assets. With the introduction of the regulatory framework, Oman aims to facilitate the growth of the virtual asset sector within its jurisdiction, while ensuring investor protection and regulatory compliance.
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