Bahrain’s Central Bank Shakes Up Crypto: Now Allows Yield-Bearing Stablecoins – Here’s What You Need to Know

• Why Is Bahrain’s Stablecoin Move a Big Deal?
• What Are the Strict Requirements for Stablecoin Issuers?
• How Do Bahrain’s Rules Compare to the UAE’s?
• What’s the Fine Print on Governance and Compliance?
• Could Yield-Bearing Stablecoins Backfire?
• FAQ: Your Burning Questions Answered

Bahrain’s Central Bank (CBB) just dropped a regulatory bombshell, greenlighting yield-bearing stablecoins—a first in the Gulf region. Unlike the UAE’s more restrictive approach, Bahrain now permits Sharia-compliant and USD-pegged stablecoins, with strict reserve requirements (think AA-rated banks only). License fees? 0.25% of ops costs, capped at $31,800. Buckle up—this could redefine crypto in the Middle East.

Why Is Bahrain’s Stablecoin Move a Big Deal?

The Central Bank of Bahrain (CBB) isn’t just dipping its toes into crypto—it’s cannonballing in. Their newly effective "Stablecoin Issuance Module" allows approved issuers to offer stablecoins that pay passive yields, sourced from interest or Sharia-compliant rewards on reserve assets. Translation: your stablecoins could now earn while they sit idle. But there’s a catch—issuers must set "reasonable" rates to avoid destabilizing the coin or their own finances. Think of it as a high-wire act between innovation and risk management.

What Are the Strict Requirements for Stablecoin Issuers?

Want to mint stablecoins in Bahrain? Better bring your A-game. The CBB mandates:

• Reserves: Only cash deposits in AA- (or better) banks, central bank debt securities, or short-term gov-backed repos.
• Track Record: 3+ years in stablecoin issuance or crypto assets—no rookies allowed.
• Licensing: Written approval required before launch, plus annual fees of 0.25% of operational costs (min $13,300, max $31,800).

Oh, and forget about sketchy reserves—the CBB will scrutinize asset liquidity and credit risk like a hawk. One whiff of harm to Bahrain’s economy, and your application gets tossed.

How Do Bahrain’s Rules Compare to the UAE’s?

While the UAE’s central bank limits stablecoins to AED-pegged payment tools, Bahrain’s playing 4D chess. Key differences:

Bottom line: Bahrain’s framework is arguably the most progressive in the region—for better or worse.

What’s the Fine Print on Governance and Compliance?

The CBB isn’t messing around with AML. Issuers must implement anti-money laundering controls per Volume 6 of its rulebook, including systems to detect and combat terror financing. One BTCC analyst noted, "This could set a benchmark for GCC crypto regulation—if Bahrain pulls it off without stifling innovation."

Could Yield-Bearing Stablecoins Backfire?

Let’s be real—offering yields on stablecoins is like handing out free samples at a casino. The CBB knows this, hence its warning: rates mustn’t jeopardize the coin’s stability or the issuer’s solvency. Remember TerraUSD’s collapse? Bahrain’s betting that strict reserve rules will prevent a sequel.

FAQ: Your Burning Questions Answered

What’s the license fee for stablecoin issuers in Bahrain?

0.25% of annual operational expenses, with a minimum of 5,000 BHD (~$13,300) and a cap at 12,000 BHD (~$31,800).

Can anyone issue stablecoins under Bahrain’s new rules?

Nope—only entities with 3+ years in crypto or stablecoin issuance need apply, and reserves must be top-tier (AA-rated banks or gov securities).

How does Bahrain’s approach differ from the UAE’s?

Bahrain allows multi-currency (BHD/USD) and yield-bearing stablecoins, while the UAE restricts them to AED for payments only.