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Oman moves closer to finalizing digital asset framework

As Oman inches forward with its plans to establish a comprehensive legal framework for digital assets, the nation’s financial markets regulator seeks the public’s opinion on specific provisions.

The Capital Market Authority of Oman (CMA) has published a consultation paper detailing its finalizing of the digital currency framework. It will primarily focus on regulating virtual asset service providers (VASPs), digital asset issuance, licensing prerequisites, and associated fees.

“The CMA is seeking to provide an alternative financing and investment platform for issuers and investors while mitigating the risks associated with the virtual asset class,” read the consultation paper.

The paper sets forth a series of 26 questions that pertain to various topics, notably requesting respondents to express their opinions regarding minimum capital requirements for VASPs and provide suggestions for the secure storage of digital assets by VASPs.

Regarding corporate governance, the CMA proposes that VASP situate critical aspects of their business operations in Oman to encourage communications with local partners. The regulator goes on to ask respondents whether “initial coin offerings should be subject to a registration regime.”

Other areas of interest include using privacy coins, proposed audit requirements, and prudential requirements for licensed issuers.

“Do you agree with the proposal to introduce additional audit requirements for issuers, including audits for smart contracts utilized in the process of issuing?” read a section of the consultation paper.

The CMA expects interested individuals to submit their opinions to the public consultation by August 17, noting that the responses will aid in “determining its policy,” and has revealed its interest in receiving feedback from industry stakeholders, consumer groups, academics, and businesses potentially impacted by the forthcoming legislation.

The plans for a digital currency regulatory framework appear to have been in the works since February, but a closer study indicates that efforts go back to 2020. At that time, both the CMA and the central bank were embroiled in heated discussions over the future of digital assets in the country, mulling over the idea of a blanket ban.

Digital currency adoption in the Middle East

Oman’s neighbors in the Middle East are slowly beginning to embrace digital currencies; the region’s digital asset adoption is led by the United Arab Emirates (UAE), which has grand plans to transform the country into a global Web3 hub.

Qatar and Saudi Arabia are following UAE’s path in creating a thriving environment for digital assets, but anti-money laundering (AML) and terrorist financing risks have continued to stand in the way of an all-out embrace. In June, Qatar received criticism from the Financial Action Task Force (FATF) over loopholes in the supervision of its digital currency industry.

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