MANAMA: Bahrain has the most advanced and progressive legal framework for cryptocurrencies in the region, according to the top boss of a Sharia-compliant digital assets exchange.
Launched to bridge the gap for a marketplace where users can invest in crypto safely and legally using local currencies, CoinMENA chose to set up headquarters in the kingdom because the founders felt the Central Bank of Bahrain has the most advanced and progressive legal framework for cryptocurrencies in the region, the firm’s co-founder and managing director Dina Saman told the GDN in an exclusive interview.
She added that Bahrain was also the first country in the Mena region to provide an onshore crypto licence to exchanges.
Asked to comment on the future of cash and fiat currency –government-issued currency that is not backed by a commodity such as gold – Ms Saman said the trend is clearly moving away from cash and more towards direct digital payments, but the future will include both fiat and cryptocurrencies.
“We have our debit and credit cards on our phones, sometimes I go days or weeks without ever needing to use physical cash. In terms of fiat currency, I do not think it will become obsolete, but it will evolve into a more digital version.
For example, this past year several countries announced they are considering introducing central bank digital currencies. At the same time, some countries like El Salvador, and cities like Lugano in Switzerland already recognise Bitcoin as a legal currency,” she added.
Busting the myth that the rising popularity of cryptocurrencies has been accompanied by a growing incidence of theft and hacking globally, Ms Saman cites the ‘Crypto Crime Report’ by The Chain Analysis to point out that transactions involving illicit addresses accounted for just 0.15 per cent of total cryptocurrency transactions.
She also asserts that the firm takes cyber-security very seriously.
“As a CBB regulated financial entity, we adhere to the most robust security rules and regulations globally. There are two key aspects to cyber security and protecting our user’s assets, the tech side, and the user side,” said the official, adding, “On the tech side, we store our user’s crypto funds in a combination of hot, cold, and multi-signature wallets. The majority of the crypto we hold resides in cold wallets (offline), which is the most secure form of storing digital assets. We keep only a small percentage of our crypto in hot wallets to facilitate our liquidity and process user transactions instantly. CoinMENA has also partnered with BitGo, one of the world’s leading crypto assets custodians to further ensure the safety of clients’ assets.”
Contrary to popular belief, Ms Saman said the large majority of security breaches online come from phishing attacks and scams that trick unwitting users to give away their passwords or wallet keys.
“At CoinMENA we constantly remind our users that we will never ask them to share their passwords or authentication code. At a basic level, if you receive an email, always check the sending address, and as we say in crypto, don’t trust, verify.”
She is also emphatic in stating that investing in crypto-assets is not just for the big boys.
“In fact, it is the opposite. In traditional finance, there are lots of barriers to the common investor, whether it’s accreditations or minimum ticket allocations, and even then it’s still very restrictive. When companies go for IPO, the pre-IPO sales are only reserved for big investors and institutions. Crypto is the opposite. It’s open to anyone, and you can invest for as little as $10,” she explains.
The crypto expert also says that volatility in the crypto markets world-wide is due to many factors, with less than 4pc of the world owning crypto being the main one.
“We are still in the very early stages of adoption.”
Another key reason for the large swings is that it’s the only global ‘free’ market and is traded 24/7.
“For example, if the stock market starts to crash, countries can step in and simply shut off trading for a day or two or more. This happened several times with the US stock exchange during Covid for example. With crypto, that’s not possible, markets will remain open 24/7,” added Ms Saman.