Oman’s journey towards implementing its own virtual asset regulations is gaining momentum, as the Capital Market Authority (CMA) seeks public input on its proposed framework governing digital assets, including cryptocurrencies.

In a consultation paper released on July 27, the CMA revealed that it is diligently crafting a comprehensive regime for the virtual asset sector.

The objective is to create an alternative financing and investment platform for issuers and investors while mitigating the risks associated with virtual assets.

The consultation paper comprises 26 questions, designed to gather insights and opinions from industry stakeholders.

Key areas covered in the proposed framework include regulatory and licensing requirements for virtual asset service providers (VASPs), corporate governance, risk management, and virtual asset issuance.

The framework is planned to cover various types of virtual assets, such as 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 face a potential ban, subject to feedback from the public.

To ensure accountability and compliance, VASPs might be required to establish a local presence in Oman through a legally established entity and physical office.

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Additionally, minimum capital requirements might be imposed on them.

The proposed framework could also mandate virtual asset firms to hold only a small percentage of their assets in hot wallets, undergo regular audits of safeguarded assets, and demonstrate proof of reserves.

The CMA has set a deadline for public feedback until Aug. 17, with the possibility of key opinions being made public on their website. Following this consultation phase, the CMA will proceed to finalize the regulatory framework.

The groundwork for this initiative began earlier, with discussions on regulating the virtual asset industry in Oman commencing in November 2020.

A task force, comprising officials from the CMA and the Central Bank of Oman, was formed to study the feasibility of permitting or banning virtual asset activities.

In December 2022, consultants were brought in to aid in the establishment of the new regulatory regime.

The progress made by Oman in drafting and seeking public input on its virtual asset regulations reflects the country’s commitment to embracing financial innovation while ensuring proper safeguards against potential risks.

As the consultation phase concludes and the regulatory framework takes shape, Oman moves closer to providing a secure and regulated environment for virtual asset transactions within its borders.

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