Oman to establish regulatory framework for virtual assets

Despite the warnings about investing in digital assets by Oman’s central bank, about 65,000 residents hold cryptocurrencies.

The Capital Market Authority (CMA), the regulator of Oman’s financial markets, looks to establish a new regulatory framework for the virtual asset industry in the Sultanate.

According to a Feb. 14 press release, the new rules would include oversight of virtual asset activities, a licensing process for virtual asset service providers (VASPs), and a framework to identify and mitigate risks surrounding the new asset class. The announcement reads:

“The aim of this new regulation is to establish a market regime for virtual assets that include rules to prevent market abuse, including [thorough] surveillance and enforcement mechanisms.”

Several virtual asset activities under the proposed guidelines include issuing crypto assets, tokens, crypto exchange products and services and initial coin offerings, among others.

XReg Consulting Limited, a virtual assets policy and regulatory consultant, and Said Al-Shahry and Partners, Advocates & Legal Consultants (SASLO), an Omani law firm, were enlisted to advise and assist CMA in drafting the new regulation.

The financial markets regulators said the proposed regulatory framework aligns with Oman’s Vision 2040, an initiative to digitally transform the country’s economy while attracting global players into Oman.

While Oman looks to position itself as a leader in virtual asset adoption in the Middle East through the proposed regulatory oversight, the country’s central bank appears to be warier when it comes to cryptocurrencies.

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In October, the Central Bank of Oman (CBO) urged citizens to exercise caution when transacting with cryptocurrencies, given the risks of fraud around the asset.

In repeated advisories, CBO warned it has yet to license any entity to trade in cryptocurrencies in Oman and that currency banking laws do not cover any digital or virtual currencies and activities involving their use.

However, the warning did not stop Omanis from holding and investing in the asset. According to the recent Souq Analyst survey, about 65,000 residents, or 1.9% of the adult population, own cryptocurrencies in the country.

The study found that 62% of locals own crypto for the long term, while 25% said they use digital assets for learning and education. The rest said they use cryptocurrencies for daily trading.