Digital tokens such as cryptocurrencies have gained increasing popularity worldwide and Bahrain’s financial market offers new investment opportunities. The Central Bank of Bahrain (“CBB”) acknowledges there is a demand in the market for crypto-assets where people in Bahrain are dealing, selling, and holding positions in crypto-assets. Hence, in April 2023, the CBB issued amendments to the Crypto-Asset Module (“CRA Module”) Volume 6 (Capital Markets) of the CBB Rulebook to keep up with the changing market dynamics.

The CBB first issued rules and regulations governing crypto-assets in the CRA Module in 2019. Since then, there has been an immense increase in the demand to trade cryptocurrencies. The most recent quarterly amendment aims to enhance regulatory clarity, investor protection, and market integrity of the financial sector in line with the Kingdom’s Economic Recovery Plan[i]. In this article, we will be covering a brief overview of the amendments to the CRA Module.

Overview of the Amendments

The amendments to Volume 6 introduce several key changes affecting the definition, licensing, and regulation of crypto-asset service providers and products in Bahrain. The CBB aims to minimize the risk of financial crime and illegal use of crypto-assets through the following amendments:

  1. the addition of the following new definitions: ‘Asset Token’, ‘Digital Token’, ‘Digital Token Issuer’, ‘Digital Token Advisor’, ‘Whitepaper’, ‘Soft-Cap’ and ‘Utility Token’;
  2. amendments to the definitions of ‘Crypto-Assets’, ‘Founders’, and ‘Securities’;
  3. the deletion of the definition of ‘Accepted Crypto-Assets’;
  4. the addition of a new chapter in the CRA Module on digital token offerings;
  5. the issuance of a whitepaper template for Digital Token Offerings that prescribes content requirements for offering Digital Tokens; and
  6. enhancements to the cyber security requirements.

Definition of Digital Token

One of the significant changes is the expansion of the definitions to include “Digital Tokens”, which are defined in the CRA Module as “asset or utility tokens satisfying the definition of securities under the CBB law, its implementing rules and regulations.” ‘Securities’ now includes an additional limb providing  “crypto-assets which exhibit characteristics similar to securities such as

  • a crypto-asset which gives right to a financial entitlement, either in the form of a pre-determined cash flow (similar to bonds) or a share in profit (similar to equities);
  • a crypto-asset which grants decision power in a project to its holders (similar to voting rights); or
  • a crypto-asset which represents a monetary claim on the issuer.”

Crypto-asset Services

Anyone who wants to take on regulated crypto-asset services from Bahrain must obtain a crypto-asset license. Regulated cryptocurrency services include the following types of activities:

  • Reception and Transmission of Order
  • Trading in Crypto-assets as an Agent
  • Trading in Crypto-assets as Principal
  • Portfolio Management
  • Crypto-asset Custodian
  • Investment Advice
  • Crypto-asset Exchange
  • Digital Token Advisor

These services play a crucial role in the crypto ecosystem, providing users with easy access to digital assets and enabling them to trade securely.

CBB Licensing Categories[ii]   

Another significant amendment is the CBB licensing requirement for crypto-asset services. The licensing category depends on the type of regulated crypto-asset, and the CBB offers four categories:

Category 1 licensees may undertake the following regulated crypto-asset service:

  • Reception and transmission of orders; and
  • Provide investment advice in relation to crypto-assets.

Category 2 licensees may undertake the following regulated crypto-asset service:

  • Trading in crypto-assets as an agent;
  • Portfolio management;
  • Crypto-asset custody; and
  • Investment advice.

Category 3 licensees may undertake the following regulated crypto-asset service:

  • Trading in crypto-assets as an agent;
  • Trading in crypto-assets as principal;
  • Portfolio management;
  • Crypto-asset custody;
  • Investment advice; and
  • Act as a digital token advisor.

Category 4 licensees may undertake the following regulated crypto-asset service:

  • Operate a licensed crypto-asset exchange;
  • Crypto-asset custody service; and
  • Act as a digital token advisor.

The CRA Module outlines the four categories of crypto-asset licenses with a different minimum capital requirement for each. Each category has a different set of services that a crypto-asset operator can provide.

CBB Licensing Requirement[iii]

Licensees must meet the following minimum capital requirement, deposited into a retail bank licensed by the Kingdom of Bahrain:

Minimum Capital Requirement Sl. No.

Licensing Category

Minimum Capital (BHD)


Category 1



Category 2



Category 3



Category 4



Applications for a license must include, inter alia:

  • a business plan specifying the type of business to be conducted;
  • application forms for all shareholders and subsidiaries; and
  • application forms for all controlled functions.  


At the CBB’s discretion, there may be an additional requirement for licensees to hold additional capital in an amount and form decided by the CBB. The CBB might go through this procedure to ensure the financial integrity of the licensee.

Whitepaper Template

A whitepaper is a document stating the technology behind a project, including among other information a detailed description of the system architecture and interaction with the users, a description of the project and use of proceeds, anticipated growth, other technical and financial details, and the team behind the project[iv].

Cyber Security Requirements

Some of the cybersecurity risks associated with crypto-assets include the risk of partial or full loss of crypto-assets in the event of a cyber-attack. The recent amendments to the CRA Module include measures that have been put in place to mitigate cyber security risks.


In conclusion, the amendment to Volume 6 of the CBB Rulebook is a positive step toward enhancing regulatory clarity and investor protection. Looking ahead, the digital market in Bahrain is expected to continue evolving driven by technological advances, changing consumer preferences and regulatory developments.

[i] CBB Issues a New Regulatory Framework for Digital Tokens Further Developing the Crypto-Assets Market | CBB

[ii] Vol 6_CRA (

[iii] Vol 6_CRA (

[iv] Vol 6_Glossary (

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