Crypto regulation in the world: weekly digest #134

Bahrain

The Central Bank of Bahrain (CBB) is in the process of finalizing regulations to govern the issuance of stablecoins in/from the Kingdom of Bahrain. These regulations are issued pursuant to the authority of the CBB under Article 37 to establish and enforce rules. The proposed legislation intends to enhance the central bank's ability to oversee and track blockchain-based transactions.

The regulatory framework is designed to reduce transaction costs and expand financial access. It is expected to accelerate financial transactions and enhance and support trade, especially for international transactions.

The CBB is assessing the feasibility and effectiveness of using crypto assets in payments to improve the efficiency of existing systems. The framework also aims to strengthen Bahrain’s position as a leading regional hub for the digital economy and cryptocurrency sector.

The CBB is drafting stablecoin regulations to enhance the safety of blockchain-based transactions:

• No person can undertake regulated stablecoin offering service within or from the Kingdom of Bahrain, without a license from the CBB.

• The regulated activities will be deemed to be undertaken ‘within or from the Kingdom of Bahrain’ if the person concerned is incorporated in the Kingdom of Bahrain, uses an address situated in the Kingdom of Bahrain for its correspondence, or solicits clients within the Kingdom of Bahrain.

• Stablecoin issuers must satisfy the conditions and requirements detailed in the Module for the types of stablecoins that can be issued, and the requirements pertaining to stablecoin issuer’s eligibility and obligations.

Stablecoin issuers can issue fully backed single currency stablecoins backed by Bahraini Dinar (BHD), United States Dollar (USD), or any other fiat currency acceptable to the CBB and in respect of which a prior CBB approval has been obtained. Approved stablecoins must be fully backed (1:1) by the same fiat currency it purports to be tokenising.

The minimum initial paid-up share capital (base capital) for grant of stablecoin issuer license will be as much as BHD 250,000. Stablecoin issuers must maintain an amount equal to one quarter of the minimum liquid fund requirement.

Hong Kong

The Securities and Futures Commission (SFC) of Hong Kong held the first meeting of its Virtual Asset Consultative Panel (VACP) on February 14, 2025. This panel is composed of senior executives from all licensed cryptocurrency trading platforms in Hong Kong. The VACP is chaired by Dr. Eric Yip, Executive Director of the SFC’s Intermediaries Division.

The main goals of the VACP are to protect investors and aid in the growth of a strong cryptocurrency industry. The panel's role involves defining regulatory priorities and promoting innovation. The SFC aims to develop regulations that foster industry growth while ensuring adherence to compliance standards.

Key priorities discussed at the meeting included establishing clear policies, expanding the market, and balancing regulations with innovation. The SFC is proactively engaging with licensed Virtual Asset Trading Platforms through the VACP to promote sustainable growth in the virtual asset ecosystem and establish market development priorities.

USA

The U.S. Securities and Exchange Commission (SEC) has agreed to suspend its lawsuit against Binance, signaling a possible shift in regulatory policy toward cryptocurrency firms. The SEC and Binance jointly filed a motion on February 10 requesting a 60-day pause, which the U.S. District Court for the District of Columbia is considering. Both parties said that pausing the case would help them reassess their positions as new regulatory policies take shape. After the 60-day period, Binance and the SEC plan to submit a status update to decide whether additional delays are necessary.

This decision corresponds with broader changes under the Trump Administration, which has brought regulatory relief for crypto firms. The SEC's newly formed crypto task force, launched by Acting SEC Chairman Mark T. Uyeda on January 21, aims to establish a framework for digital asset oversight, which could influence the case’s resolution. The regulator mentioned that the efforts of the new cryptocurrency task force, which aims to strengthen relationships with the crypto sector, «may impact and facilitate the potential resolution of this case».

Legal experts believe the SEC’s evolving stance could impact ongoing cases against Coinbase, Ripple, and Kraken, as these lawsuits share similar allegations concerning unregistered securities and broker-dealer violations. Former SEC assistant director Robert Heim suggests the agency is reconsidering its legal interpretations, which could lead to settlements or dismissals of pending cases.

However, Binance’s situation remains fluid, with the possibility of a settlement still on the table. In 2023, the exchange paid $2.7 billion to the CFTC for regulatory violations, signaling a willingness to resolve disputes. Binance later agreed to pay a roughly $4 billion settlement and Binance's CEO, Changpeng Zhao, pleaded guilty to a felony related to his failure to prevent money laundering on the platform.

News from other countries:

• The Virtual Assets Regulatory Authority (VARA) in Dubai has issued warnings regarding the risks associated with investing in memecoins. VARA highlights the speculative nature, volatility, and potential for market manipulation associated with these assets. They emphasize that memecoins often lack intrinsic value and are driven by social media trends, hype, and misleading promotions, which can lead to significant financial losses.

• Roskomnadzor, Russia's internet watchdog agency, has blocked access to BestChange, a major no-KYC cryptocurrency exchange aggregator in Russia and Eastern Europe. The platform monitors exchange rates across various e-currency exchangers and facilitates over-the-counter (OTC) cryptocurrency trading, most of which operate with no KYC and other legal requirements.

We continue to highlight the news of the world of crypto regulation worldwide. Please stay with us!