CRA-4.1.7

Licensees, prior to offering portfolio management service, investment advice or complex products such as but not limited to derivative products, margin or leverage products or products with features that may make it difficult for a retail investor to understand the essential characteristics of the product and its risks (including the pay-out structure and how the product may perform in different market and economic conditions), must undertake a suitability and appropriateness assessment for retail clients (investors other than accredited investors) to determine the suitability and appropriateness of crypto-assets products and services for retail clients. Licensees must gather sufficient information from every retail client to be in a position to decide whether the crypto-asset product and/or services are suitable and appropriate for the client.

CRA-4.1.8

Licensees may seek the following information for the purposes of suitability and appropriateness assessment:

CRA-4.1.9

A licensee should take reasonable measures to avoid transactions with another crypto-asset entity, infrastructure or service provider where the counterparty is unknown or anonymous (e.g., via certain peer to peer or decentralised exchanges) at any stage of its business process.

CRA-4.1.10

In accordance with the reporting requirements under Section 8.1, specifically SIO-8.1.1 and SIO-8.1.7, of the Stablecoin Issuance and Offering (SIO) Module, licensees providing services in approved stablecoins to their clients must provide necessary information as required under SIO-8.1.1 to the stablecoin issuer. The information must be calculated as this information stands on the following reporting reference dates: 31^stMarch, 30^thJune, 30^thSeptember and 31^stDecember and the report must be submitted to the stablecoin issuer no later than 7 days from the end of the respective reporting period. The value of the transactions referred to in Paragraph SIO- 8.1.1(c) and (d) must be reported in Bahraini Dinar by using the relevant exchange rate applicable at the end of each calendar day during the applicable reporting period.

CRA-4.2.3

Licensees must submit to the CBB their annual audited financial statements no later than 3 months from the end of the licensee's financial year. The financial statements must include the statement of financial position (balance sheet), the statements of income, cash flow and changes in equity and where applicable, the statement of comprehensive income.

CRA-4.2.4

Licensees must submit a soft copy (electronic) of their full annual report to the CBB within 4 months of the end of their financial year.

CRA-4.2.5

Licensees must submit to the CBB unaudited quarterly financial statements (in the same format as their Annual Audited Accounts), reviewed by the licensee’s external auditor, on a quarterly basis within 45 calendar days from the end of each of the first 3 quarters of their financial year.

CRA-4.3.6

Licensees must establish and adopt a board approved crypto-asset listing policy in accordance with the framework stipulated in this Section.

CRA-4.3.7

Licensees must, prior to commencement of business operations, provide a copy of the crypto-asset listing policy to the CBB. Unless the CBB raises specific concerns with respect to the board approved crypto-asset listing policy, licensees may implement the policy and self-certify crypto-assets for listing on its platform.

CRA-4.3.8

Prior to listing a crypto-asset, a licensee must notify the CBB of its intent to list the crypto-asset, provide the findings of the risk assessment undertaken in accordance with Paragraph CRA- 4.3.14 along with the board resolution approving the crypto-asset. The licensee must confirm in its notification to CBB that the proposed new crypto-asset complies with the requirements of its crypto-asset listing policy.

CRA-4.3.9

Licensees must provide a list of all the crypto-assets listed on its platform no later than 10 days from the end of each quarter.

CRA-4.3.10

The crypto-asset listing policy referred to in Paragraph CRA-4.3.6 must include robust procedures that comprehensively address all steps involved in the review and approval of crypto-assets. Licensees must have necessary monitoring capability (e.g. via monitoring systems, internal monitoring control, on-chain analysis etc.) in place before listing of the crypto-asset on its platform.

CRA-4.3.11

The crypto-asset listing policy should help establish a mechanism for approval of a crypto-asset only if the licensee unambiguously concludes that the listing and trading of the crypto-asset is consistent with the CBB’s approach to establish a fair, transparent and orderly crypto-asset market, complies with applicable laws, rules and regulations and is not detrimental to the interest of the market or client.

CRA-4.3.12

Licensees must not list crypto-assets that facilitate or may facilitate the obfuscation or concealment of the identity of a client or counterparty or crypto-assets that are designed to, or substantially used to circumvent laws and regulations. Licensees must ensure that they only list crypto-assets to which they have in place the necessary AML monitoring capabilities.

CRA-4.3.13

Licensees must ensure that:

CRA-4.3.14

Licensees must establish criteria and undertake a comprehensive risk assessment of the crypto-assets that it intends to list on its platform. The assessment must include, but are not limited to, the following:

CRA-4.3.15

Licensees must have policies and procedures in place to monitor the listed crypto-assets to ensure that continued use of the crypto-asset remains prudent. This includes:

CRA-4.3.16

Licensees must make disclosures, which are easily accessible and prominently visible to clients, for each listed crypto-asset, containing at a minimum, the following information:

CRA-4.3.17

Licensees must prominently display on their platform the following statement, “THE CENTRAL BANK OF BAHRAIN HAS NEITHER REVIEWED NOR APPROVED THE LISTED CRYPTO-ASSETS”.

CRA-4.3.18

Where the CBB determines that undertaking regulated services in a crypto-asset may be detrimental to the financial sector of the Kingdom of Bahrain and/or it may affect the legitimate interest of clients, the licensees, based on the instruction of the CBB, must delist the crypto-asset. In such scenarios, the licensee shall remain responsible for orderly settlement of trade and any liability arising due to the delisting of the crypto-asset.

CRA-4.5.1

Licensees undertaking regulated crypto-asset service and authorised to hold clients’ assets must apply the same standards and comply with the requirements of segregation and handling of clients’ assets Rules set out in this Section.

CRA-4.5.1A

For the purpose of this Module, “clients assets” means crypto-assets, money and other assets received or held on behalf of a client by the licensee and any crypto-assets, money or other assets accruing therefrom.

CRA-4.5.2

For purposes of safeguarding client's rights in relation to crypto-assets and client money which are held or controlled by the licensee, a licensee must hold clients' money and/or to crypto-assets in specially created and segregated accounts. These accounts must be identified separately from any other accounts used to hold money and/or to crypto-assets belonging to the licensee.

CRA-4.5.3

A licensee must obtain a written declaration from the entities with whom the licensee has deposited client assets that the said entity renounces and will not attempt to enforce or execute, any charge, right of set-off or other claim against the account.

CRA-4.5.4

A licensee must properly handle and safeguard client money. The arrangement to handle and safeguard client money, must include, but not be limited to the following:

CRA-4.5.5

Client money must be received by the licensee directly into a client bank account.

CRA-4.5.5A

A licensee must match any unidentified receipts in its client bank accounts with all relevant information in order to establish the nature of any payment and the identity of the person who has made it. Where the receipt is not client money, within one business day of becoming so aware, that amount of money should be paid out of the client bank account.

CRA-4.5.6

Licensees must reconcile, at least on a monthly basis, the balance on each client's money account as recorded by the licensee with the balance on that account as set out in the statement issued by the entity with whom the licensee has deposited clients' money.

CRA-4.5.7

Licensees must also reconcile, at least on a monthly basis, the total of the balances on all clients' money accounts as recorded by the licensee with the total of the corresponding credit balances in respect of each of its clients as recorded by the license.

CRA-4.5.7A

Licensees must ensure that the client money reconciliations referred to in Paragraphs CRA-4.5.6 and CRA-4.5.7 are completed within 10 business days from the end of the months. Any differences, shortfalls and excess balances must be investigated, and corrective measures taken to restore correct client asset balance.

CRA-4.5.8

As part of establishing a relationship with a client, and prior to entering into an initial transaction with such client, licensee must disclose in clear, conspicuous, and legible writing in both Arabic and English languages, all material risks associated with crypto-asset products and services including at a minimum, the following:

CRA-4.5.9

When registering a new client, and prior to entering into transactions with such client, a licensee must disclose in clear, conspicuous, and legible writing in both Arabic and English languages, all relevant terms and conditions associated with its products and services including at a minimum, the following:

CRA-4.5.9A

In addition to the disclosure requirements stipulated in Paragraph CRA-4.5.9, Category-1, Category-2 and Category-3 crypto-asset licensees must disclose, in writing, the following information to clients:

CRA-4.5.10

Prior to each transaction in a crypto-asset with a client, a licensee must furnish to the client a written disclosure in clear, conspicuous, and legible writing in both Arabic or English languages, containing the terms and conditions of the transaction, which must include, at a minimum, to the extent applicable:

CRA-4.5.11

A licensee must ensure that all disclosures required in this Section are acknowledged as received by clients.

CRA-4.5.12

Upon completion of any transaction, a licensee must provide to the client a confirmation note containing the following information:

CRA-4.5.12A

Where a client undertakes more than one transaction, the licensee may prepare a single confirmation note which:

CRA-4.5.12B

Licensees must provide the confirmation note to the client no later than the end of the business day on which the transaction was undertaken.

CRA-4.5.13

[This Paragraph was deleted in April 2023].

CRA-4.5.14

Licensees must take reasonable steps to detect and prevent fraud, including by establishing and maintaining a written anti-fraud policy. The anti-fraud policy must, at a minimum, include:

CRA-4.5.14A

A client account must be considered dormant if the client does not trade for a period of 12 (twelve) continuous months. All the accounts designated as dormant need to be monitored carefully in order to avoid unauthorized transactions in the account.

CRA-4.5.14B

If a client wishes to make his/her account active after 12 continuous months or thereafter, the licensee must ensure that the client submits a request to reactivate his/her account. In case there is any change in the information such as; address, contact details, email ID, bank account, financial disclosure provided in KYC at the time of registration as client, the same must be submitted along with the request. After verification of the updated / revised details and approval from the compliance officer or money laundering reporting officer (MLRO), the account can be made active and transactions can take place.

CRA-4.5.15

Licensees must not provide a regulated crypto-asset service to a client as mentioned unless there is a client agreement entered into between the licensee and the client containing the key information specified in Rule CRA-4.5.16.

CRA-4.5.16

The client agreement referred to in Rule CRA-4.5.15 must include:

CRA-4.5.16A

Licensees must provide periodic statements i.e. confirmation note, monthly statement of account and annual statement of account to their clients. Licensees may provide to their clients the periodic statement information through their website and/or application. Where a licensee provides the periodic statement through its website and application, the licensee is not required to send the periodic statement to their clients separately.

CRA-4.5.17

A licensee must prepare and provide a monthly statement of account to the client no later than 7 business days following the month where any of the following circumstances apply:

CRA-4.5.18

The monthly statement of account referred to in Paragraph CRA-4.5.17 must include the following information:

CRA-4.5.19

Where a licensee receives a request from a client for a statement of account it must provide the client, as soon as practicable after the date of the request but no later than 5 working days from the date of the request, such statement of account which must include the information required as per Paragraph CRA-4.5.18 for the period specified by the client.

CRA-4.5.20

Where a licensee provides the statement of account at the request of the client (refer to CRA-4.5.19), it may impose a reasonable charge on the client for providing the statement of account.

CRA-4.5.21

A licensee must prepare and provide a statement of account to the client, on an annual basis, no later than the end of the seventh business day after the end of the financial year except under following circumstances:

CRA-4.5.22

Where a client requests for withdrawal of client assets, a licensee, unless the restriction is pursuant to a freeze or block order from a court or due to factors related to money laundering and terror financing (suspicious transactions), must not impose restriction on withdrawal of the client assets held under its control.

CRA-4.6.6

Licensees must ensure that all the following requirements are met with regards to promotion of products or services:

CRA-4.7.6

Licensees must acknowledge in writing customer written complaints within 5 working days of receipt.

CRA-4.7.7

Licensees must respond to a client complaint promptly and within a period of 4 weeks of receiving the complaint or provide the complainant with an appropriate explanation as to why the licensee is not, at that time, in a position to respond and must indicate by when the licensee will respond.

CRA-4.7.8

Licensees must decide and communicate how it proposes to provide the customer with redress. Where appropriate, the licensee must explain the options open to the customer and the procedures necessary to obtain the redress.

CRA-4.7.9

Where a licensee decides that redress in the form of compensation is appropriate, the licensee must provide the complainant with fair compensation and must comply with any offer of compensation made by it which the complainant accepts.

CRA-4.7.10

Where a licensee decides that redress in a form other than compensation is appropriate, it must provide the redress as soon as practicable.

CRA-4.7.11

A licensee must inform the clients who have filed a complaint with the licensee and are not satisfied with the response received as per Paragraph CRA-4.7.7, about their right to forward the complaint to the Consumer Protection Unit at the CBB within 30 calendar days from the date of receiving the letter from the licensee.

CRA-4.7.12

Licensees must submit to the Consumer Protection Unit at the CBB, a quarterly report summarising the following:

CRA-4.7.13

Where no complaints have been received by the licensee within the quarter, a 'nil' report must be submitted to the Consumer Protection Unit at the CBB.

CRA-4.7.14

A licensee must maintain a record of all client complaints. The record of each complaint must include:

Such records must be retained by the licensee for a period of 10 years from the date of receipt of the complaint.

CRA-4.8.1

Licensees handling client asset and/or client money must maintain a professional indemnity coverage (insurance policy) in accordance with the scope of coverage provided in Paragraph CRA-4.8.3.

CRA-4.8.2

For the purposes of Paragraph CRA-4.8.1, licensees must maintain professional indemnity coverage for an amount that is determined based on its assessment of the potential risk exposure. Such amount, however, must not be less than BD100,000.

CRA-4.8.3

Licensees must ensure that the Professional Indemnity Coverage, inter alia:

CRA-4.8.4

The professional indemnity coverage must be obtained from an insurance firm acceptable to the CBB and licensed in the Kingdom of Bahrain. Licensees must submit a Professional Indemnity Insurance Return (Form PIIR) on an annual basis. Additionally, they must provide, upon request, evidence to the CBB of the coverage in force.

CRA-4.8.5

[This Paragraph was deleted in April 2023].

CRA-4.8.6

The requirement to maintain professional indemnity coverage will normally be met by the licensee obtaining an insurance policy from an insurance firm. The CBB may also accept an insurance indemnity policy issued at group level, e.g. issued with respect to the parent of the licensee, provided the terms of the policy explicitly provide indemnity coverage with respect to the licensee and meets the requirements of Paragraphs CRA-4.8.1, CRA-4.8.2 and CRA-4.8.3.

CRA-4.8.7

Upon written application to the CBB, the requirement in Rule CRA-4.8.1 may instead be met by the licensee depositing with a retail bank licensed to operate in the Kingdom of Bahrain, an amount, specified by the CBB, to be held in escrow against future claims. This amount will not be less than the minimum required policy limit.

CRA-4.8.8

The policy must contain a clause that it may not be cancelled or lapsed without the prior notification of the CBB. The policy must also contain a provision for an automatic extended reporting period in the event that the policy is cancelled or lapsed, such that claims relating to the period during which the policy was in force may subsequently still be reported.

CRA-4.9.1

[This Paragraph was deleted in April 2023].

CRA-4.9.2

A licensee must maintain the confidentiality of all client information in accordance with the requirements of the Personal Data Protection Law (PDPL).

CRA-4.9.3

[This Paragraph was deleted in April 2023].

CRA-4.10.2

Licensees must obtain the CBB's prior written approval to any dividend proposed to be distributed to the shareholders, before announcing the proposed dividend by way of press announcement or any other means of communication and prior to submitting a proposal for a distribution of profits to a shareholder vote.

CRA-4.10.3

One of the factors that the CBB will consider while determining whether to grant an approval is when it is satisfied that the level of dividend proposed is unlikely to leave the licensee vulnerable to breaching the CBB's financial resources requirements, taking into account, as appropriate, the trends in the licensee's business volumes, profitability, expenses and performance.

CRA-4.10.4

To facilitate the prior approval required under Paragraph CRA-4.10.2, licensees must provide the CBB with:

CRA-4.12.1

[This Paragraph was deleted in April 2023].

CRA-4.12.2

[This Paragraph was deleted in April 2023].

CRA-4.12.3

[This Paragraph was deleted in April 2023].

CRA-4.12.4

Where a licensed crypto-asset exchange decides to delist or suspend the trading of one or more crypto-assets, it must notify the CBB with the rationale for the suspension or delisting of the crypto-asset.

CRA-4.12.5

Without prejudice to the right of the CBB to demand suspension or delisting of a crypto-asset from trading, a licensed crypto-asset exchange must suspend or delist from trading a crypto-asset which no longer complies with the Rules of the licensed crypto-asset exchange unless such suspension or delisting would likely cause significant damage to the clients' interests or the orderly functioning of the market.

CRA-4.12.6

Where a licensed crypto-asset exchange decides to suspends or delists from trading a crypto-asset, it must by way of a public announcement inform the clients' regarding the date of suspension or delisting of the crypto-asset.

CRA-4.12.7

Where a llicensed crypto-asset exchange has suspended or delisted a crypto-asset from trading, the CBB may require that other licensees, which fall under its jurisdiction and trade the same crypto-asset, also suspend or delist that crypto-asset from trading, where the suspension or delisting is due to suspected market abuse, a take-over bid or the non-disclosure of inside information about the issuer or crypto-asset except where such suspension or delisting could cause significant damage to the clients' interests or the orderly functioning of the market.

CRA-4.12.8

A licensed crypto-asset exchange must ensure expedient and accurate verification of trades and matching settlement instructions.

CRA-4.12.9

A licensed crypto-asset exchange must ensure that it has necessary systems and controls to verify the existence of funds and crypto-assets, as applicable, of clients submitting orders.

CRA-4.12.10

A licensed crypto-asset exchange must disclose to its clients and the public as appropriate, on a continuous basis during normal trading, the following information relating to trading of crypto-assets on its platform:

CRA-4.12.11

A licensed crypto-asset exchange must use appropriate mechanisms to enable pre-trade information to be made available to the public in an easy to access and uninterrupted manner.

CRA-4.12.12

A licensed crypto-asset exchange must disclose the price, volume and time of the transactions executed in respect of crypto-assets to the public as close to real-time as is technically possible on a non-discretionary basis. A licensed crypto-asset exchange must use adequate mechanisms to enable post-trade information to be made available to the public in an easy to access and uninterrupted manner, at least during business hours.

CRA-4.12.13

A licensed crypto-asset exchange must keep, for at least 10 years, the relevant data relating to all orders and all transactions in crypto-assets which are carried out through their systems.

CRA-4.12.14

For the purposes of Paragraph CRA-4.12.10, the records must contain the relevant data that constitute the characteristics of the order, including those that link an order with the executed transaction(s) that stems from that order. This shall include:

CRA-4.12.15

A licensed crypto-asset exchange must maintain adequate resources and have back-up facilities in place in order to be capable of reporting at all times.

CRA-4.12.16

[This Paragraph was deleted in April 2023].

CRA-4.12.17

[This Paragraph was deleted in April 2023].

CRA-4.12.18

A licensed crypto-asset exchange must have in place effective systems, procedures and arrangements to reject orders that exceed pre-determined volume and price thresholds or are clearly erroneous.

CRA-4.12.19

A licensed crypto-asset exchange must be able to temporarily halt or constrain trading if there is a significant price movement in a crypto-asset on its platform or a related platform during a short period and, in exceptional cases, to be able to cancel, vary or correct any transaction.

CRA-4.12.20

A licensed crypto-asset exchange must report the reasons for halting trading and any material changes to those reasons to the CBB in a consistent and comparable manner.

CRA-4.12.21

A licensed crypto-asset exchange must ensure that its fee structures are transparent, fair and non-discriminatory and that they do not create incentives to place, modify or cancel orders or to execute transactions in a way which contributes to disorderly trading conditions or market abuse.

CRA-4.12.22

A licensed crypto-asset exchange must ensure that its Rules on co-location services are transparent, fair and non-discriminatory.

CRA-4.12.23

A licensed crypto-asset exchange must be able to identify, by means of flagging from its clients, orders generated by algorithmic trading, the different algorithms used for the creation of orders and the relevant persons initiating those orders.

CRA-4.12.24

A licensed crypto-asset exchange must, upon request by the CBB, make available to the CBB, data relating to the order book or give the CBB access to the order book so that it is able to monitor trading.

CRA-4.12.25

A licensed crypto-asset exchange must establish procedures that enable the confirmation of relevant details of transactions in crypto-assets.

CRA-4.12.26

A licensed crypto-asset exchange's settlement procedures must clearly define the point at which settlement is final.

CRA-4.12.27

A licensed crypto-asset exchange must complete final settlement no later than the end of the trade date, and preferably intraday or in real time, to reduce settlement risk.

CRA-4.12.28

A licensed crypto-asset exchange must clearly define the point after which unsettled payments, transfer instructions, or other obligations may not be revoked by a client.

CRA-4.12.29

A licensed crypto-asset exchange must minimize and strictly control the credit and liquidity risk arising from money settlements.

CRA-4.12.30

A licensed crypto-asset exchange must clearly state its obligations with respect to the delivery of crypto-assets and should identify, monitor, and manage the risks associated with such delivery.

CRA-4.12.31

A licensed crypto-asset exchange must have in place adequate systems to safeguard against settlement failures as well as resolution systems which cater for such failures. Such systems should be clearly documented in the licensed crypto-asset exchange's policies, procedures and rules.

CRA-4.12.32

A licensed crypto-asset exchange must establish a system that monitors settlement failures of transactions in crypto-assets. Upon occurrence of such events, the licensed crypto-asset exchange must immediately report to the CBB, details of the settlement failure and any other relevant information.

CRA-4.12.33

A licensed crypto-asset exchange must issue clear and transparent Rules in order to ensure that any crypto-assets being traded on its platform is being traded in a fair, orderly and efficient manner. Such rules, and any changes or amendments thereto are to be approved by the CBB.

CRA 4.12.34

The CBB may require a licensed crypto-asset exchange to effect any changes to its Rules, as it may deem necessary.

CRA-4.12.35

The Rules must, inter alia, include Sections on:

CRA-4.12.36

Where, due to the occurrence of any event or circumstances, a licensed crypto-asset exchange is unable to discharge any of its functions whatsoever, it must on the day of such occurrence immediately notify the CBB of its inability to discharge that function, specifying:

CRA-4.12.37

Where a licensed crypto-asset exchange has taken any action against any of its clients, including the suspension of the client from trading, the blacklisting or expelling of a client or any other action, in respect of a breach of its rules, that licensed crypto-asset exchange must immediately notify the CBB of that event, providing: