Digital delight

Palmex, a professional digital asset exchange powered by ArabianChain Technology, has become the first and only cryptocurrency exchange in the Middle East and North Africa to receive a Regulatory Sandbox License.

The Central Bank of Bahrain (CBB) granted it under the sandbox regulation framework in the kingdom, setting the stage for much-awaited acceptance by regulators, banks and currency exchange houses in the region that have been weary of transacting with digital currencies.

A regulatory sandbox is a framework and process that facilitates the development of the FinTech industry in a safe and calculated way. New business models in the sector can create regulatory ambiguity, therefore, regulatory clarity is critical to innovators in order to bring compliant services to market.

ArabianChain founder and CEO Mohammed Alsehli said: “When we launched Palmex, we did so with the conviction that regulatory status is fundamental to our future and the future of the industry. Our team has put in a lot of time and resources into working with regulators to ensure we are compliant, and we are excited to give our users an added level of confidence in using Palmex with this extra layer of legitimacy.

“ArabianChain will start with a limited number of select users to test and optimise the process and then expand to the rest.”

In effect, the sandbox creates a virtual safe space in which both start-ups and established businesses can trial and refine innovative products, services, platforms and business models in a live but controlled environment, where risks to customers and the wider financial system are mitigated, giving regulators time to adapt legislation as needed.

Whilst in the regulatory sandbox, companies are required to adhere to CBB regulations including Know Your Customer (KYC), Anti-Money Laundering and Countering Financing of Terrorism, as well as follow appropriate disclosure, protection and compensation requirements related to their customers.

The approval from the Bahrain Central Bank marks the arrival of a new wave of forward-looking regulation around digital asset trading in the region that is geared toward creating an environment to encourage FinTech innovation and inclusion, while ensuring the best interests of the nation, the banking system, investors and customers are protected.

Companies will also be able to apply to list their tokens and coins with Palmex and benefit from the compliance of the exchange.

Mohammed added: “As the only regional digital asset exchange with a Sandbox license, we expect to see a significant rise in awareness and adoption, driving a huge spike in the number of trades and token-based fundraising across the region while maintaining the safety of the financial system.”