Stepping up its game of crypto regulation, the Sultanate of Oman is laying out a framework for the sector. Reportedly, the Oman authorities is getting closer to launching its own virtual asset regulations with its financial markets regulator seeking public comments on the proposed framework for governing digital assets, such as cryptocurrencies.
According to recent reports, the Capital Market Authority of Oman (CMA), is in the process of drafting a comprehensive regime for the digital asset sector. The consultation paper briefed that the framework will includes various business requirements and market abuse prevention.
Sources reveal that the CMA is seeking to provide an alternative financing and investment platform for issuers and investors while mitigating the risks associated with the [virtual asset] class.”
Reportedly, the recently launched consultation paper includes 26 questions asking industry stakeholders for their opinion. The questions include proposals on regulatory and licensing requirements for virtual asset service providers (VASPs), corporate governance, risk management and virtual asset issuance.
The government’s proposed framework comprises standards for utility tokens, security tokens, fiat-backed and asset-backed stablecoins, and other digital currencies that fall under the Financial Action Task Force’s definition of virtual assets (FATF). However, some suggest that the issuance of privacy coins might get banned, irrespective of public feedback.
Additionally, the regulator might mandate VASPs to establish a local presence in Oman through a legally established entity and physical office and impose minimum capital requirements on them.
If approved, virtual asset firms might have to hold only a low percentage of assets in hot wallets, conduct regular audits of safeguarded assets and present proof of reserves.
The CMA is accepting feedbacks to the consultation paper till August 17, with prime responses potentially getting posted on its website. Following the consultation phase of the development of the virtual asset regime, the CMA will draft and finalize the regulatory framework.
While the CMA announced the launch of a regulatory framework in February, discussions on regulating the virtual asset industry began much earlier. In November 2020, the country’s National Committee for Combating Money Laundering and Terrorist Financing decided to launch a task force comprising CMA and Central Bank of Oman officials to study whether to ban or permit virtual asset activities.
Notably, Oman’s development of crypto regulation marks its contribution towards safeguarding investors from the increasing threats. With the increasing advancements in the crypto space, nations across the globe are growing cautious and taking precautionary as prescribed by some of the international watchdogs.
In this race, the Gulf nations have also raised their alarms and are in the lookout for any signs of danger. The neighbouring nation, United Arab Emirates despite being a crypto favouring region intends to regulate the sector with full caution.