Palmex becomes the first cryptocurrency exchange in the Middle East and North Africa (MENA) region to receive a regulatory sandbox license. The license, issued by the Central Bank of Bahrain (CBB), is expected to take effect before the end of this week,according to reports.
The Dubai-based cryptocurrency exchange, launched in October by startup Arabian chain Technology, seeks to serve people in the Middle East and North Africa region. The firm has been waiting for the authorities to grant them the license in order to fully exercise their operations.
Authorities conducted a full investigation on the company on its compliance with existing regulations. Palmex operator went through a rigorous application process to verify their security systems, policies, processes and controls to protect customers. Companies operating under the regulatory sandbox license are required to adhere to CBB regulations, including developing Know Your Customer (KYC), anti-money laundering (AML) and counter-terrorism financing (CTF) measures. They also need to follow appropriate disclosure, protection and compensation requirements related to their customers.
Once the license becomes effective on July 15, companies will be able to list their tokens and coins with the exchange. However, the company will only allow a limited number of selected users to test and optimize the process. After the test period is over, Palmex will then allow all the other businesses to list their operations with them.
According to its website, Palmex offers multiple trading pairs including BTC, Litecoin, Ethereum, Monero and Dubai coin (DBIX).
The regulatory sandbox license enables companies to test financial products and services based on new technologies without the burden of heavy regulations and licensing. The sandbox is essentially a “safe space,” where businesses can experiment with innovative financial services “without immediately incurring all the normal regulatory and financial consequences of engaging in the activity in question,” at least for a specified amount of time.
The CBB initiated a Regulatory Sandbox in 2017 in a bid to promote effective competition, embrace new technology and encourage financial inclusion as well as improve customer experience in the region.