With the global upsurge of Blockchain Technology and Bitcoin, Bahrain is not far behind to adopt them in order to boost its entrepreneurial ecosystem.
Recently, in response to a query at the MIT Innovation Forum in the country’s capital city Manama, the Chief Executive Officer of Bahrain Economic Development Board, H.E. Mr. Khalid Al Rumaihi said that Bahrain was “open to Bitcoin”, adding that a regulatory sandbox was the proper way for the country to allow experimentation in a controlled environment. He also stated that the national adoption of Blockchain technology will be a key enabler of making Bahrain a pioneer in the burgeoning FinTech space.
The Central Bank of Bahrain recently put in place a regulatory sandbox. The regulatory sandbox is a framework and a process that facilitates the development of the FinTech industry in a calculated way. It is defined as “a safe space in which businesses can test innovative products, services, business models and delivery mechanisms without the burden of heavy regulations and licensing. This simply allows startups and FinTech firms to test and experiment their banking ideas and solutions. As of today, four companies applied, and two have already received approval.
So, what about blockchain? What is it exactly? To simply put it, Blockchain is a distributed ledger that tracks transactions among parties. What makes it interesting is its fundamental properties, which applies to every single transaction:
- All parties agree and verify that the transaction occurred.
- All parties agree and verify on the identities of the individuals participating in the transaction.
- All parties agree and verify on the time of the transaction.
- The details of the transaction are easy to review and not subject to dispute.
- Evidence of the transaction persists, unchangeable, over time.
As we understand, these properties combine to form a system that, by design, timestamps, and records all transactions in a secure and permanent manner, and is easily auditable in the future. To know more about Blockchain, read this.
A classic example of using blockchain in a startup is Esanjo, founded by Omar Kassim, the serial entrepreneur who had also founded the popular JadoPado. It is interesting to note that recently the National Bank of Abu Dhabi (NBAD) has become the first bank in the Middle East to offer blockchain technology.
Bahrain wants to become a pioneer in the burgeoning FinTech space and according to H.E. Mr. Al-Rumaihi, national adoption of blockchain technology will be a key enabler of this.
“The ability for blockchain to be adopted at the country level is a huge opportunity for Bahrain to move into the spotlight as a pioneer in this space,” he said at the GCC Financial Forum in Manama earlier this year. “Blockchain will unlock so many different possibilities for businesses in the way email and Internet did years ago.”
In this context, let us also not forget what David Parker, Executive Director of Financial Services and Business Development in Bahrain Economic Development Board, stated in an interview conducted by Forbes Middle East: “Bahrain, as an established financial hub in the GCC over the last 40 years, is well positioned to be a leading regional Fintech hub. However, we recognize that certain regulatory requirements can make it more challenging for firms to experiment and adapt to a fast-changing environment”.
As is evident, the Kingdom is also becoming interested in Bitcoin and Cryptocurrency. It is closely looking at digital currencies. According to H.E. Mr. Khalid Al Rumaihi, Bahrain’s Ministry of Finance is keen on adopting Bitcoin and Issuing bonds in digital currency. The Bahraini Government hopes to be on the cutting edge of FinTech innovations, as it is excited to adopt crypto experimentation within their economy in order to move ahead of the crowd.
This will undoubtedly boost Bahrain’s aspiration to be innovative and high-tech. As stated by H.E. Mr. Rumaihi, the national adoption of blockchain technology will enable the island nation to become a leader in the burgeoning ecosystem. He believes that the whole financial industry is in the midst of being disrupted by blockchain technology. Now blockchain will unlock a whole new era for personal transactions through the Internet. It will totally reshape the fiduciary landscape, as is the popular belief. In this regard, he hopes Bahrain can develop a thriving blockchain ecosystem.
As known, Bitcoin is the name of the best-known cryptocurrency. The blockchain in Bitcoin literally acts as a ledger; it keeps track of the balances and updates users as money changes hands -as it represents a record of a transaction-.
H.E. Mr. Khalid Al Rumaihi said that a Bitcoin company from Saudi Arabia was looking to establish a Bitcoin exchange in Bahrain. “We are working with the Central Bank of Bahrain on this,” he said, adding:
“I hate to be a regulator today. Because we are obliged to protect the consumers. There is a fear about funding and anti-money laundering. We are going to look through the Regulatory Sandbox allowing small-scale experimentation.”
With these innovative developments in the horizon, Bahrain will soon spearhead into the world of FinTech as one of the key players in the global entrepreneurial ecosystem— a dream that StartUp Bahrain has been working towards since its inception.