Crypto-funded debit card in Oman

Capital Market Authority (CMA) Virtual Assets Regulatory Framework (2023): The CMA issued a comprehensive regulatory framework for virtual assets in July 2023. This framework aims to regulate the activities of VASPs, including issuance, listing, and trading of virtual assets, ensuring compliance with international AML/CFT standards. It covers licensing requirements, corporate governance, market conduct, and crucial for this discussion, AML/CFT obligations.

Central Bank of Oman (CBO): The CBO has previously issued warnings regarding the risks of virtual currencies. However, in parallel with the CMA, it has also been working on developing its own regulatory framework for digital assets, particularly concerning digital currencies and payments.

Royal Decree No. 30/2016 on Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT Law), amended by Royal Decree No. 112/2020: This is the foundational law for AML/CFT in Oman. While it predates explicit crypto regulations, its broad definitions of "funds," "financial institutions," and "financial activities" are intended to encompass new technologies and virtual assets once they fall under a regulated scope. VASPs, once licensed, will be designated as financial institutions or designated non-financial businesses and professions (DNFBPs) under this law.

Oman's Adherence to FATF Standards: Oman is a member of the Middle East and North Africa Financial Action Task Force (MENAFATF) and is committed to implementing the recommendations of the Financial Action Task Force (FATF). FATF Recommendation 15 specifically addresses new technologies, urging countries to regulate and supervise VASPs for AML/CFT purposes, including sanctions compliance.

No specific license exists. Oman does not currently have a licensing regime for digital asset custody providers. Financial institutions operating under CBO licenses are generally advised against involvement with virtual currencies.

Reference: While a direct "licensing law" for crypto custodians doesn't exist, the CBO's general advisories against virtual currencies imply that such activities are not sanctioned for regulated entities.

Royal Decree No. 30/2016 (Law on Combating Money Laundering and Terrorism Financing): This is the foundational AML/CFT law in Oman, outlining the obligations for financial institutions and designated non-financial businesses and professions (DNFBPs).

Ministerial Decision No. 63/2016 (Implementing Regulations of the Law on Combating Money Laundering and Terrorism Financing): This decision provides detailed regulations and guidelines for implementing Royal Decree 30/2016.

Identification and Verification (ID&V) of Customers:

Beneficial Ownership Identification:

Understanding the Purpose and Intended Nature of the Business Relationship:

Conducting ongoing scrutiny of transactions undertaken throughout the course of the business relationship to ensure consistency with the VASP's knowledge of the customer, their business, and risk profile.

Politically Exposed Persons (PEPs):

Enhanced Due Diligence (EDD):

Obligation to Report: If a VASP knows, suspects, or has reasonable grounds to suspect that funds are proceeds of a criminal activity or are related to terrorism financing, it must promptly file a Suspicious Transaction Report (STR) with the Oman Financial Intelligence Unit (OMAFIU).

No Tipping-Off: VASPs and their employees are prohibited from disclosing to the customer or any third party that an STR is being, or has been, submitted, or that an investigation is being conducted.

Transaction Records: All records of domestic and international transactions, including information on the origin and destination of the funds/virtual assets, transaction amount, date, and type.

CDD Records: Records of all information obtained through the CDD process (identification data, beneficial ownership information, business relationship purpose, etc.).

Screening customers and transactions against national and international sanctions lists (e.g., UN, OFAC).

Central Bank of Oman (CBO): Regulates banking, payment systems, and e-money. Its purview would cover stablecoins that function as a means of payment or stored value.

Capital Market Authority (CMA): Regulates securities, capital markets, and investment products. Its purview would cover stablecoins that qualify as securities.

E-money/Payment Tokens: If a stablecoin is backed 1:1 by a fiat currency, issued by a regulated entity, and primarily used for payments or as a store of value, the CBO would likely treat it under its existing framework for Payment Systems Law or future specific e-money regulations. This would align with international standards where such stablecoins are often viewed similarly to e-money.

Securities: If a stablecoin grants rights similar to traditional securities (e.g., rights to profits, ownership in an enterprise, or a promise of return beyond simple redemption at par), or if it represents an investment contract, the CMA would likely classify it as a security under the Securities Law.

Virtual Assets (General): Regardless of their specific functional classification, stablecoins would be considered "virtual assets" under the Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) Law. This means any entity dealing with them would be subject to stringent AML/CFT obligations.

CBO's general stance on Virtual Assets: While specific regulations for stablecoins are pending, the CBO has issued warnings and statements regarding the risks associated with virtual assets. Direct CBO regulations on "Virtual Assets" are anticipated or under development, but a specific "Stablecoin Act" is not yet published.

By Analogy (E-money): If a stablecoin were classified as e-money under the CBO's purview, then existing or future regulations for e-money issuers would likely require full backing of issued e-money with safeguarding requirements, ensuring that customer funds are held in segregated accounts with reputable financial institutions. This is a common practice for e-money regulations globally.

Financial Service Licenses: Depending on the classification, an entity issuing a stablecoin would likely require a relevant financial service license from either the CBO or the CMA:

CBO: A license as a Payment Service Provider (PSP) or an Electronic Money Institution (EMI) if the stablecoin functions as e-money.

CMA: A license as an investment firm or a financial services company if the stablecoin is deemed a security.

Fintech Regulatory Sandbox: The CBO has established a Fintech Regulatory Sandbox. Companies wishing to experiment with innovative financial technologies, including potentially stablecoins, can apply to operate within this controlled environment. This allows for testing and observation under CBO supervision before full regulatory frameworks are in place.

Central Bank of Oman (CBO): Has consistently issued warnings against dealing in cryptocurrencies for financial institutions under its supervision, citing risks such as volatility, money laundering, and lack of regulatory oversight. These warnings essentially act as a prohibition for banks and payment service providers. While these warnings are a form of regulatory action, they haven't been followed by publicly disclosed, named enforcement actions with specific fines against a particular entity for crypto-related violations that are distinct from broader financial regulations.

Capital Market Authority (CMA): This is where the most significant development has occurred recently. The CMA has been working on and recently issued a regulatory framework for Virtual Assets, marking a shift towards controlled legitimization rather than outright prohibition in certain sectors.

CBO Warnings against Crypto (Ongoing/Recurring)

CMA Issuance of Virtual Asset Regulatory Framework