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  • CRA-15.1 CRA-15.1 Digital Token Offerings

    • CRA-15.1.1

      A company must not make an offer or issue a digital token whose issuance is regulated by the CBB unless it has obtained a written approval from the CBB. Prior to offering a digital token, the digital token issuer must meet the eligibility criteria and requirements set out in this Module.

      Added: April 2023

    • Digital Tokens

      • CRA-15.1.2

        All offers of digital tokens which exhibit the characteristics of a security are regulated by the CBB.

        Added: April 2023

      • CRA-15.1.3

        While determining whether a digital token qualifies as a security, the CBB will examine the underlying economic purpose of the digital token, its structure and characteristics, including the rights attached to the digital token. For the avoidance of doubt, a digital token may be considered:

        (a) Equivalent of an equity security: where it confers or represents ownership interest in the issuer or gives entitlement to share in the issuer's profit; or
        (b) Equivalent of a bond or debt security: where it constitutes or evidences the indebtedness of the issuer of the digital token in respect of any money that is lent to the issuer by the digital token holder, its maturity is fixed, is redeemable at maturity and gives entitlement to share in interest distributed by the digital token issuer.
        Added: April 2023

      • CRA-15.1.4

        In order to determine whether a digital token is considered a security, the CBB shall, amongst other things, take into consideration the following:

        (a) Does it give the digital token holder an entitlement against the digital token issuer? If so, is the entitlement in kind or a monetary entitlement? If it is monetary entitlement, is it profit sharing, a predetermined entitlement, or an undetermined other kind of entitlement?
        (b) Does the digital token represent a monetary claim on the digital token issuer?
        (c) Is the digital token transferable?
        (d) Does it confer decision power on the project of the digital token issuer?
        Added: April 2023

      • CRA-15.1.5

        The guidance provided are indicative and not exhaustive and, the CBB may take into consideration additional factors while assessing an application for issuance of a digital token. A digital token shall be considered a security if it is either a utility token or an asset token and exhibits the following characteristic:

        (a) Utility tokens: A utility token shall be considered a security if it has an investment purpose at the point of issue or it has the potential to become investment objects. To this end, utility tokens which are transferable shall be considered as securities.
        A utility token shall not be treated as a security if its sole purpose is to confer digital access rights to an application or a service, and if the utility token can actually be used in this way at the point of issue. In such cases, the underlying function is to grant access rights and the connection and resemblance to an equity security or debt security is absent.
        (b) Asset tokens: An asset token shall be treated as a security where it:
        (i) gives rights to financial entitlement and exhibits features of either bonds or equity securities: the former if the entitlement is a predetermined cash flow; and the latter if the entitlement is a share in profit;
        (ii) gives right to an entitlement in kind, and the token holder holds decision making powers in the project.
        Added: April 2023

    • Initial Assessment

      • CRA-15.1.6

        Potential digital token issuers seeking to undertake a digital token offer are encouraged to initiate preliminary discussion with the CBB to determine whether the digital token is regulated by the CBB. As part of the initial assessment, potential digital token issuers should provide necessary details, including details about the issuer and description of the project, to the CBB to determine suitability of the digital token for issuance.

        Added: April 2023

    • CBB’s Right of Refusal or Restrictions on Digital Token Offering

      • CRA-15.1.7

        The CBB may reject an application for offering of digital tokens if it is found that the issuance thereof might cause damage or be contrary to the interests of the holders of the digital tokens or the market in general.

        Added: April 2023

      • CRA-15.1.8

        Where the CBB grants its approval in relation to an offering, it may impose additional conditions, as it deems necessary.

        Added: April 2023

    • General Requirements

      • CRA-15.1.9

        The digital token issuer must meet the following requirements for a digital token offering:

        (a) The digital token issuer must be a legal person duly incorporated under the laws of the Kingdom of Bahrain or a jurisdiction acceptable to the CBB and which is not publicly listed on a stock exchange;
        (b) The digital token issuer must ensure no conflict of interest arises during the issuance of digital tokens;
        (c) The digital token issuer must protect and act in the best interests of digital token holders as well as provide equal treatment to all digital token holders;
        (d) The digital token issuer must adhere to the offering and issuing timetable contained in the whitepaper, or as amended, subject to the CBB’s written approval;
        (e) The maturity period of a digital token exhibiting characteristics of a debt security must not exceed 5 years;
        (f) For any single offering of digital token, the digital tokens must have identical terms and conditions of issuance, including having the same price; and
        (g) The offer period for a digital token offering must not be less than 10 calendar days after the day of commencement of the offer and must not exceed a maximum period of three (3) months.
        Added: April 2023

      • CRA-15.1.10

        The digital token issuer and the digital token advisor must fulfil all obligations in their respective capacities in accordance with the signed written agreements concluded between them in respect of the digital token issue.

        Added: April 2023

    • Moratorium on Equity Interest

      • CRA-15.1.11

        Founders and senior management of the digital token issuer must, in aggregate, own at least 50% equity holding in the digital token issuer, on the date of the issuance of the digital tokens.

        Added: April 2023

      • CRA-15.1.12

        Post issuance of the digital tokens, the founders and senior management of the digital token issuer are not entitled to sell or transfer their shareholding for a period of 1 year, starting from the date of the issuance of the digital tokens

        Added: April 2023

    • Cooling-off Period

      • CRA-15.1.13

        A cooling-off right must be given to an investor who is investing in a digital token offering, except for where such investor is a shareholder, board member or an employee of the digital token issuer. The cooling-off period must be not less than two (2) business days commencing from the date of close of the issue. No fee or penalty must be charged to the investor who exercises the right to a refund during the cooling-off period.

        Added: April 2023

      • CRA-15.1.14

        Investors exercising their cooling-off rights must be refunded within five (5) business days. The refund amount must be the sum of:

        (a) The purchase price paid for the digital token; and
        (b) Any other charges imposed at the time of purchase of the digital token.
        Added: April 2023

    • Soft Cap (Minimum Subscription)

      • CRA-15.1.15

        The soft cap must not be set lower than 80% of the digital token offer size. Digital token issuers may set a higher soft cap.

        Added: April 2023

      • CRA-15.1.16

        Where a digital token offer fails to reach the soft cap as set in the whitepaper, the digital token advisor must within five (5) business days from the closure of the digital token offering:

        (a) Send each investor a notification about the failure to reach the soft cap and refund the subscription amount and other charges that the investor paid for the digital token offer; and
        (b) Report the failure to reach the soft cap, the refund made and cancellation of the digital token offer to the CBB.
        Added: April 2023

    • Oversubscription

      • CRA-15.1.17

        If a digital token offering is over-subscribed after the closing of the offering period, the digital token advisor must make allotment in accordance with the pre-determined basis which must be described in the whitepaper. The digital token advisor must not make allotment in excess of the limit stated in the whitepaper and any excess subscription amounts received from investors must be refunded to investors within 3 business days from the date of allotment.

        Added: April 2023

    • Release of Funds

      • CRA-15.1.18

        The digital token issuer and the digital token advisor must enter into an agreement with provisions, among other matters, on the schedule of release of proceeds (if stated in the whitepaper), the progress report that will be required before each release of proceeds, and that the digital token advisor will return the said proceeds to the investors in case the soft cap of the digital token offer is not reached or in a pro-rata basis in case the project is not completed by the digital token issuer.

        Added: April 2023

      • CRA-15.1.19

        The banking arrangement for the purpose of managing subscription money between the digital token issuer and the digital token advisor must be dissolved upon completion of fund transfer process, unless the digital token offering failed to meet the soft cap target or the project is not completed by the digital token issuer with notification to the CBB.

        Added: April 2023

      • CRA-15.1.20

        If the digital token issuer is not able to complete the project, the appointed digital token advisor must:

        (a) Immediately notify the CBB regarding the non-completion of the project by the digital token issuer and the reason behind the project not being completed; and
        (b) Within 5 business days from the date of notifying the CBB, individually notify each investor about the non-completion of the project and refund the remaining proceeds under its care on a pro-rata basis to the investors based on the amount of their investment.
        Added: April 2023

    • Allotment

      • CRA-15.1.21

        Digital tokens must be allotted to subscribing investors within 6 calendar days of the closing date of the digital token offer in accordance with the allotment basis stipulated in the whitepaper. The subscription results must be announced on the digital token advisor’s platform.

        Added: April 2023

    • Approval Requirements

      • CRA-15.1.22

        A digital token issuer must submit the application along with the draft whitepaper and other documents as specified in Paragraph CRA-15.1.28, through its digital token advisor, in a form and manner as specified by the CBB, including the liabilities of its signatories and a fit and proper declaration of its board members and senior management.

        Added: April 2023

      • CRA-15.1.23

        The digital token issuer must demonstrate to the CBB that the gross proceeds to be raised from the digital token offering would be sufficient to undertake the project or business as proposed in the whitepaper.

        Added: April 2023

      • CRA-15.1.24

        The CBB will make a decision on the application within 30 working days of receipt of all required information and documents complete in all respect.

        Added: April 2023

      • CRA-15.1.25

        The CBB’s approval for an offer of digital tokens does not mean that it has approved the appropriateness of the digital token issuer’s project or authenticated the financial and technical information presented in the whitepaper.

        Added: April 2023

    • Suspension or Withdrawal of the Approval

      • CRA-15.1.26

        Notwithstanding the approval granted by the CBB to the digital token issuer, the CBB may, at any time during the offer period, or before the funds raised is released to the digital token issuer, do any or all of the following:

        (a) Revoke the CBB’s approval;
        (b) Issue a direction to suspend the digital token offering; or
        (c) Issue a direction to defer the implementation of the digital token offering.
        Added: April 2023

      • CRA-15.1.27

        The CBB may exercise its powers under Paragraph CRA-15.1.26 if the CBB becomes aware of any of the following:

        (a) The digital token issuer has breached the CBB Law, its regulations, resolutions or directives (including any requirement of this Module or any other applicable Modules of the CBB Rulebook);
        (b) The digital token issuer has failed to comply with any terms or conditions imposed by the CBB and/or the digital token advisor;
        (c) The application, including the whitepaper, contains any statement or information that is false or misleading or from which there is a material omission; or
        (d) There is a concern with regards to the digital token issuer’s corporate governance record or with the integrity of any of the digital token issuer’s directors and senior management.
        Added: April 2023

    • Documentation Requirements

      • CRA-15.1.28

        A digital token issuer, through its appointed digital token advisor, must provide the CBB the following documents:

        (a) A draft whitepaper prepared in accordance with the requirements of this Module;
        (b) An up-to-date copy of the memorandum and articles of association;
        (c) A copy of the digital token issuer’s Board of Directors’ resolution approving the issuance of digital tokens;
        (d) Copies of audited financial statements. A company that has been established for less than one year must submit projected financial statements whereas a company that has been established for a longer period (more than 1 year) must provide the financial statements for the past financial years going up to a maximum of preceding 3 financial years;
        (e) Documents proving the establishment of an arrangement that ensures the monitoring and safeguarding of the funds to be collected through the digital token offering in accordance with Paragraph CRA-15.2.10;
        (f) A copy of the agreement entered into with the appointed licensed retail bank for deposit of funds to be raised through the digital token offer;
        (h) All proposed marketing material related to the digital token offering;
        (i) A declaration by the digital token advisor confirming its responsibility for carrying out due diligence on the digital token issuer and assessing accuracy of the information contained in the whitepaper and other documents submitted as part of the application (Appendix CRA-2);
        (j) A declaration by the Board of Directors regarding the reliability and accuracy of the information provided to the CBB as part of the digital token offering requirements (Appendix CRA-3);
        (k) A copy of the duly signed declaration by the legal advisor for the digital token offer, based on a due diligence exercise of all applicable laws, facts and arrangements, including enforceability of the rights relating to the digital tokens, as appropriate (Appendix CRA-4); and
        (l) Any other information as required by the CBB.
        Added: April 2023

    • Registration of Whitepaper

      • CRA-15.1.29

        The final corrected copies of the whitepaper and other documents must be registered with the CBB no later than 2 business days prior to the date of commencement of the offering period.

        Added: April 2023

    • Contents of the Whitepaper

      • CRA-15.1.30

        The whitepaper must contain, in both the Arabic and English language, all the information concerning the digital token issuer and the proposed digital token offering that would enable investors to make an informed investment decision and understand the risks relating to the offering. The information in the whitepaper must, at a minimum, include the following:

        (a) A detailed description of the digital token issuer's project, the reasons for the offering and the planned use of the funds raised;
        (b) Detailed information about the directors, senior management, key personnel and advisers involved in the project’s design and development including the name, designation, nationality, address, professional qualifications and related experience;
        (c) The business plan of the digital token issuer;
        (d) The key characteristics of the digital token including the rights, conditions, function and obligations attached to the digital tokens including any specific rights attributed to a token holder and the procedures and conditions of exercise of these rights;
        (e) A summary of the legal opinion regarding the priority of the claims of digital token holders in the event of insolvency or liquidation of the digital token issuer;
        (f) A detailed description of the digital token offering, including but not limited to:
        (g) The number of digital tokens to be issued;
        (h) The digital token issue price;
        (i) The subscription terms and conditions;
        (j) The minimum amount necessary to carry out the project and the maximum amount of the offering; and
        (k) The subsequent use and application of the proceeds thereafter illustrated in a scheduled timeline for drawdown and utilisation of proceeds (“schedule of proceeds”);
        (l) The technical specifications of the digital token;
        (m) The risks relating to the digital token issuer, the digital tokens, the digital token offering and the carrying out of the project, as well as mitigating measures thereof;
        (n) A detailed description on the determination of the accounting and the valuation treatments for the digital tokens including all valuation methodology and reasonable presumptions adopted in such calculation;
        (o) The allotment policy for the digital tokens;
        (p) A detailed technical description of the protocol, platform and/or application of the digital token, as the case may be, and the associated benefits of the technology;
        (e) Detailed description of the sustainability and scalability of the underlying business or project;
        (f) Detailed description of the financial, technical, legal and commercial due diligence and market feasibility undertaken on the project;
        (g) Financial statements of the digital token issuer in accordance with CRA15.1.28(d); and
        (h) The offering timetable.
        Added: April 2023

      • CRA-15.1.31

        The whitepaper must not include presentation of estimates, projections, forecasts, or forward-looking statements, or overviews, without sufficient qualification, or without sufficient factual basis and reasonable assumptions.

        Added: April 2023

      • CRA-15.1.32

        The information provided in the whitepaper must be fair, clear, accurate, complete in all respects and not misleading, and must be presented in a concise and comprehensible manner. It must not include any promotional statements to excite rather than to inform.

        Added: April 2023

      • CRA-15.1.33

        The whitepaper must be prepared in accordance with the template provided in Appendix CRA-1.

        Added: April 2023

      • CRA-15.1.34

        The CBB, prior to approving an application for offering of digital tokens, shall assess whether the information provided in the whitepaper is complete and comprehensible. The whitepaper should be drawn up by the digital token issuer under the guidance of the digital token advisor prior to being submitted to the CBB.

        Added: April 2023

      • CRA-15.1.35

        Along with the whitepaper, a summary of the whitepaper must be made available to investors both in the Arabic and English language.

        Added: April 2023

      • CRA-15.1.36

        The digital token issuer must describe in the whitepaper the procedures for collection and management of the funds raised through the digital token offering. The digital token issuer must ensure the consistency of these procedures relative to the duration of the offering and the planned use of the funds collected.

        Added: April 2023

      • CRA-15.1.37

        The mechanism for collection of funds must offer sufficient guarantees ensuring its reliability and efficiency. It must have at least the following characteristics:

        (a) It must ensure the security of the funds collected;
        (b) It must ensure that the funds collected are deposited in a CBB licensed retail bank account in Bahrain dedicated specifically to the digital token offering;
        (c) It must ensure that the funds collected cannot be transferred to the digital token issuer unless the soft cap threshold is reached; and
        (d) It must ensure that the funds collected can be transferred to the digital token issuer or used by the digital token issuer only if the drawdown conditions provided for by the digital token issuer in the whitepaper are met.
        Added: April 2023

    • Responsibility for Reliability and Accuracy of the Whitepaper

      • CRA-15.1.38

        The whitepaper and the supplementary whitepaper must include a duly signed Board of Directors responsibility statement. The signature on the whitepaper and the supplementary whitepaper by the Board of Directors must be preceded by a declaration specifying that, to their knowledge, the information presented in the whitepaper corresponds to the facts, there is no omission liable to make it misleading and that they accept full responsibility for the information contained in the whitepaper.

        Added: April 2023

    • Validity of the Whitepaper Approval by the CBB

      • CRA-15.1.39

        The whitepaper remains valid for a maximum period of six months from the date of notification of the CBB’s approval. After this period, no person shall offer digital tokens based on such whitepaper, unless approved by the CBB.

        Added: April 2023

    • Supplementary Whitepaper

      • CRA-15.1.40

        Where a digital token issuer or digital token advisor becomes aware of new facts which have a significant influence on the investment decision, after the whitepaper has been approved by the CBB, but before the closing of the offer period, the digital token issuer must immediately notify the CBB and furnish a supplementary whitepaper to the CBB. At a minimum, a supplementary whitepaper must be filed with the CBB, upon occurrence of the following:

        (a) A matter has arisen, and information in respect of that matter would have required by these Rules to be disclosed in the whitepaper if the matter had arisen at the time the whitepaper was prepared;
        (b) There has been a material change affecting a matter disclosed in the whitepaper;
        (c) The whitepaper contains a statement or information that is false or misleading;
        (d) The whitepaper contains a statement or information from which there is a material omission; or
        (e) Where the assumptions based upon which the project or business proposition, the due diligence, or market feasibility were made are no longer valid or reliable.
        Added: April 2023

      • CRA-15.1.41

        Where a digital token issuer files a supplementary whitepaper with the CBB, it must immediately inform investors about the filing of a supplementary whitepaper by announcing it on the digital token advisor’s platform, as well as on its own website.

        Added: April 2023

      • CRA-15.1.42

        The changes made in the amended whitepaper shall not extend the six-month time limit referred to in Paragraph CRA-15.1.39, unless approved by the CBB.

        Added: April 2023

      • CRA-15.1.43

        A supplementary whitepaper must conform to the following requirements:

        (a) The order of the information appearing in the supplementary whitepaper must be consistent with that of the original whitepaper;
        (b) Clear identification of the items/paragraphs it supplements or replaces;
        (c) A statement that it is to be read in conjunction with the original whitepaper; and
        (d) A responsibility statement from the Board of Directors of the digital token issuer.
        Added: April 2023

      • CRA-15.1.44

        The CBB shall make its decision with respect to the supplementary whitepaper, subject to any required changes, within 15 working days from receipt of all necessary documents and information complete in all aspects.

        Added: April 2023

      • CRA-15.1.45

        The supplementary whitepaper must be published and disseminated in manner as the original whitepaper. The document must contain the word “Supplementary Whitepaper” on the first page and describe the changes in relation to the original whitepaper.

        Added: April 2023

      • CRA-15.1.46

        An investor may withdraw subscription following publication of supplementary whitepaper. The withdrawals period of the subscription must be no less than six (6) business days from the date of publication of the supplementary whitepaper and the refund amount comprising the purchase price paid and any other charges imposed at the time of purchase of the digital token must be made within 5 business days from the date of refund request. No fee must be charged to the investor for the refund.

        Added: April 2023

    • Dissemination of whitepaper

      • CRA-15.1.47

        Upon approval by the CBB, the whitepaper must be made available to the investors at least 5 calendar days prior to the commencement of digital token offering.

        Added: April 2023

      • CRA-15.1.48

        The whitepaper must be effectively disseminated by posting it in an easily identifiable and accessible manner on the platform of the digital token advisor, as well as on the website of the digital token issuer in a downloadable format.

        Added: April 2023

      • CRA-15.1.49

        The whitepaper or the supplementary whitepaper, as disseminated and made available to the public by the digital token advisor, must be identical to the version approved by the CBB and must not undergo changes by the digital token issuer or the digital token advisor subsequent to the CBB’s approval.

        Added: April 2023

    • Marketing and Promotion

      • CRA-15.1.50

        The marketing material for the digital token offering must be disseminated only after obtaining the CBB’s approval.

        Added: April 2023

      • CRA-15.1.51

        A digital token issuer must not engage any third-party individual(s) or entity, other than the digital token advisor, to endorse or represent the digital token issuer with the intended purpose of marketing, promoting, gaining publicity or soliciting funds for its digital token offering.

        Added: April 2023

      • CRA-15.1.52

        The draft marketing material must be submitted to the CBB for approval and must:

        (a) Indicate where the investor can obtain the whitepaper approved by the CBB by specifying the name of the website(s)/platform on which it is posted;
        (b) State that investors should read the information contained in the whitepaper prior to making investment decisions;
        (c) Be clearly identifiable as marketing material;
        (d) Be fair, clear and not misleading;
        (e) Disclose the risks related to the digital token offering; and
        (f) Contain information that is consistent and does not contradict with the information provided in the whitepaper.
        Added: April 2023

      • CRA-15.1.53

        If, after the approval of the whitepaper by the CBB, the digital token issuer envisages to release marketing material whose content is substantially different from the marketing material submitted to the CBB prior to such approval, it must submit to the CBB the draft modified marketing material for approval.

        Added: April 2023

      • CRA-15.1.54

        Where a supplementary whitepaper is approved by the CBB, a modified version of the marketing material must be disseminated after seeking the prior approval of the CBB, in instances where the original marketing material is not in line with the changes made by the supplementary whitepaper.

        Added: April 2023

    • Fees for Offering of Digital Tokens

      • CRA-15.1.55

        Offering of digital tokens is subject to fees levied by the CBB, pursuant to Article 180 of the CBB Law and Resolution No. (1) of 2007 with respect to determining fees categories due for licenses and services provided by the CBB. The following table outlines the non-refundable fees payable to the CBB, at the time of submission of an application for a digital token offering:

        Amount in BD

        No. Type of Approval % of Offer Value Min Amount Max Amount
        1. Approval of the Whitepaper 0.025% 500 1250
        3. Supplementary Whitepaper Fixed 100 100
        Added: April 2023

      • CRA-15.1.56

        An application for approval of a digital token offering and review of the documents related to the digital token offering will not be regarded as complete or submitted until the fee has been paid in full.

        Added: April 2023