The Sultanate of Oman is making significant progress towards implementing regulations for virtual assets, as the country’s financial markets regulator seeks public feedback on its proposed regulatory framework. The Capital Market Authority of Oman recently published a consultation paper on July 27, outlining its plans for governing digital assets such as cryptocurrencies.
The consultation paper includes a comprehensive regime for the virtual asset sector, covering various business requirements and measures to prevent market abuse. The aim is to provide an alternative financing and investment platform for issuers and investors, while also mitigating the risks associated with virtual assets.
Within the paper, the regulator poses 26 questions to industry stakeholders, inviting them to provide their opinions and feedback on specific aspects of the proposed framework. Topics of interest include regulatory and licensing requirements for virtual asset service providers (VASPs), corporate governance, risk management, and virtual asset issuance.
According to the consultation paper, the framework will encompass utility tokens, security tokens, fiat-backed and asset-backed stablecoins, and other digital currencies that fall under the Financial Action Task Force’s definition of virtual assets. However, the issuance of privacy coins, a type of cryptocurrency designed to prioritize user privacy, might be banned depending on public feedback.
The Capital Market Authority is also considering requiring VASPs to establish a local presence in Oman, including a legally established entity and a physical office. Additionally, minimum capital requirements may be imposed on virtual asset firms. If the proposed regulations are finalized, these firms might also be required to hold only a low percentage of their assets in hot wallets, conduct audits of safeguarded assets, and provide proof of reserves.
To ensure a comprehensive and inclusive regulatory framework, the CMA has invited the public to submit their feedback on the consultation paper by August 17. Key opinions and insights obtained from this feedback may be published on the CMA’s website.
Following the consultation phase, the CMA will move forward with drafting and finalizing the regulatory framework for virtual assets. This ongoing process demonstrates the country’s commitment to adopting a well-structured and thoughtful approach to regulating the virtual asset industry.
It’s worth noting that discussions around regulating virtual asset activities in Oman have been underway since November 2020. The National Committee for Combating Money Laundering and Terrorist Financing formed a task force to study whether to permit or ban virtual asset activities, comprising officials from the CMA and the Central Bank of Oman. The process was further supported by the engagement of consultants in December 2022 to assist in establishing the new regulatory regime.
The proposed regulations are an important milestone in Oman’s journey towards embracing digital assets and creating a conducive environment for their growth. By implementing a robust regulatory framework, the Sultanate seeks to strike a balance between facilitating innovation and ensuring investor protection, thereby encouraging responsible participation in the virtual asset sector.