Oman is to establish a regulatory framework for virtual assets

The Capital Market Authority (CMA), the regulator of Oman’s financial markets, looks set to establish a new regulatory framework for the virtual asset 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 asset class. The announcement reads:

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

Several virtual asset activities under the proposed guidelines include, among others, 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 the new regulation.

The financial market 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 to Oman.

While Oman looks set 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 more cautious when it comes to cryptocurrencies.

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

In October, the Central Bank of Oman (CBO) encouraged citizens should exercise caution when dealing with cryptocurrencies, given the risk of fraud surrounding the asset.

In repeated advice, the CBO warned that it has yet to license any entity to trade cryptocurrencies in Oman and that foreign exchange 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, 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 long-term, while 25% said they use digital assets for learning and education. The rest said they use cryptocurrencies for daily trading.