August 6, 2023

Oman Seeks Feedback from Public on Framework for Governing Digital Assets

Oman

Oman

Oman is moving closer to implementing its own regulations for virtual assets, including cryptocurrencies. The Capital Market Authority (CMA) of Oman is seeking feedback from the public on its proposed framework for governing digital assets.

The regulator aims to establish a comprehensive system that includes measures to prevent market abuse and requirements for businesses operating in the virtual asset sector. The consultation paper outlining the proposed framework was published on July 27.

According to the paper, 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.

The consultation paper consists of 26 questions that invite industry stakeholders to share their opinions. It contains suggestions regarding regulatory and licensing requirements for virtual asset service providers (VASPs), corporate governance, risk management, and virtual asset issuance.

The proposed framework covers utility tokens, security tokens, fiat-backed and asset-backed stablecoins, and other digital currencies that meet the Financial Action Task Force’s definition of virtual assets. However, the issuance of privacy coins may be prohibited, subject to public feedback.

The CMA may request VASPs to set up a local office in Oman with a legally established entity and physical space and impose minimum capital requirements. If approved, virtual asset firms might also be required to keep only a small percentage of assets in hot wallets, conduct audits of safeguarded assets, and provide proof of reserves.

The public is encouraged to submit their feedback on the consultation paper by August 17. Key opinions may be posted on the CMA website. After the consultation phase, the CMA will finalize the regulatory framework for virtual asset operations.

The CMA made a public announcement about its regulatory framework on February 14, but discussions regarding the regulation of the virtual asset industry in Oman started much earlier. In November 2020, the National Committee for Combating Money Laundering and Terrorist Financing in Oman established a task force that included officials from the CMA and the Central Bank of Oman to investigate whether virtual asset activities should be allowed or prohibited.

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