Oman to establish regulatory framework for virtual assets

The Capital Markets Authority (CMA), Oman’s financial markets regulator, is trying to create a new regulatory framework for the virtual assets industry in the Sultanate.

According to a February 14 press release, the new rules will 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 category assets. The announcement states:

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

Various virtual asset activities under the proposed guidelines include, but are not limited to, the issuance of crypto assets, tokens, crypto exchange products and services, and initial coin offerings.

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

Financial markets regulators said the proposed regulatory framework is in line with Oman’s Vision 2040, an initiative to digitally transform the country’s economy while attracting global players to Oman.

While Oman appears to be positioning itself as a leader in the adoption of virtual assets in the Middle East through its proposed regulatory oversight, the country’s central bank appears to be more cautious about cryptocurrencies.

Related: UAE central bank to issue CBDC as part of its financial transformation programme

In October, the Central Bank of Oman (CBO) he urged citizens to be cautious when dealing with cryptocurrencies given the fraud risks surrounding the asset.

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

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

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