SIO-14.1 General Procedures
The CBB’s Approach to Enforcement
SIO-14.1.1
The CBB favours an open, pragmatic and collaborative relationship with authorised persons, within the boundaries set by the CBB Law and Rulebook. Whilst the CBB wishes to avoid a legalistic and confrontational style of supervision, it believes that effective supervision requires effective and timely enforcement of its requirements. Should stablecoin issuers fail to cooperate, then the CBB will use the means described in this section to achieve compliance.
Added: July 2025SIO-14.1.2
In the CBB’s view, it is generally neither practical nor effective to prescribe in detail the exact regulatory response for each and every potential contravention. There are a large number of potential contraventions. Moreover, individual circumstances are unlikely to be identical in all cases and may warrant different responses.
Added: July 2025SIO-14.1.3
In deciding any given supervisory response, the CBB will nonetheless consistently assess the individual circumstance of each contravention against the principles described in this Module. The CBB’s overall approach is to take into account:
(a) The seriousness of the contravention concerned (including the risks posed to client and other market participants);(b) The compliance track record of the stablecoin issuer concerned (including the extent to which the contravention reflects systemic weaknesses or reckless behaviour); and(c) Which measures are most likely to achieve the desired result of remedying the contravention.Added: July 2025SIO-14.1.4
Such an approach reduces the risk of inappropriate enforcement actions, by allowing regulatory measures to be tailored to individual circumstances. By taking into account a stablecoin issuer’s compliance record and attitude, it also creates positive incentives and encourages an open and collaborative approach. By assessing individual cases against the same broad principles, the CBB also aims to achieve an overall consistency in its regulatory actions.
Added: July 2025SIO-14.1.5
Underlying the CBB’s approach outlined in Paragraph SIO-14.1.3 is the fundamental principle of proportionality. The enforcement measures contained in this section are of varying severity and will be used accordingly in keeping with the CBB’s assessment of the contravention. Thus, the CBB will reserve its most serious enforcement measures – such as cancellation of license or withdrawal of “fit and proper” status – for the most serious contraventions.
Added: July 2025SIO-14.1.6
Underlying the CBB’s approach outlined in Paragraph SIO-14.1.3 is the fundamental principle of proportionality. The enforcement measures contained in this section are of varying severity and will be used accordingly in keeping with the CBB’s assessment of the contravention. Thus, the CBB will reserve its most serious enforcement measures – such as cancellation of license or withdrawal of “fit and proper” status – for the most serious contraventions.
Added: July 2025SIO-14.1.7
Where a significant element of judgement is required to assess compliance with a requirement, the CBB will usually discuss the matter with the stablecoin issuer concerned, before using one of this section’s enforcement mechanisms. This is likely to be the case, for example, with respect to requirements for adequate systems and controls. Conversely, where there are clear-cut contraventions of CBB requirements, then the CBB will usually move immediately to one or more of the enforcement mechanisms outlined in this section. This is more likely to occur in cases where quantitative requirements - such as those relating to capital and/or market abuse – are concerned. In most such cases, though, the CBB also expects to continue an active dialogue with the authorised person concerned, aimed at remedying the contravention.
Added: July 2025SIO-14.1.8
Except in the limited circumstances outlined below, the CBB will usually only apply an enforcement measure after the stablecoin issuer or person concerned has been given a suitable opportunity to make representations. In the case of measures described in section SIO-14.7 to SIO-14.10, certain procedures are set out in the Central Bank of Bahrain and Financial Institutions Law (Decree No. 64 of 2006).
Added: July 2025Prohibition on Insurance
SIO-14.1.9
To help the CBB achieve the purpose of this Module, stablecoin issuers must not enter into or make a claim under a contract of insurance that is intended to, or has the effect of, indemnifying them from the fines provided for in this Module.
Added: July 2025SIO-14.1.10
The CBB will not as a matter of general policy publicise individual cases when it uses the measures set out in Section SIO-14.2 to SIO-14.7. However, in such cases the CBB may inform the stablecoin issuer’s external auditor and – in the case of stablecoin issuers with overseas operations – relevant overseas regulators.
Added: July 2025SIO-14.1.11
In exceptional circumstances, as allowed by Article 132 of the CBB Law, the CBB may decide to publicise individual cases when the measures set out in section SIO-14.6 are used, where there is a strong case that doing so would help achieve the CBB’s supervisory objectives. In such instances, the CBB will usually allow the stablecoin issuer or individual concerned the opportunity to make representations to the CBB before a public statement is issued.
Added: July 2025SIO-14.1.12
With respect to the financial penalties provided for in section SIO-14.6, stablecoin issuers are required to disclose in their annual report the amount of any such penalties paid to the CBB, together with a factual description of the reason(s) given by the CBB for the penalty.
Added: July 2025SIO-14.1.13
Without prejudice to the above policy, the CBB may from time to time publish aggregate information on its use of measures set out in Section SIO-14.2 to SIO-14.7, without identifying the stablecoin issuers or individuals concerned, unless their identities have previously been disclosed as provided for in Paragraphs SIO-14.1.11 or SIO-14.1.12.
Added: July 2025
