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Crypto License in Bahrain

Published:
March 17, 2022

Demand for regulated crypto-activity is rising, and Bahrain may be one of the few jurisdictions trying to meet it head-on. As global exchanges face tighter restrictions in the EU, U.S., and parts of Asia, several digital asset firms are setting their sights on the Kingdom of Bahrain, where licensing paths appear clearer.

The country’s central bank currently offers two categories of crypto-licenses. The push, they say, is driven by Bahrain’s recent updates to its Digital Assets Module, which simplifies onboarding while maintaining core corporate governance rules. This structure allows for compliance, scalability, and service delivery overseas, especially for any company expanding into crypto-exchanges. Many are considering Dubai and Singapore, for example, but it is the regulatory transparency in Bahrain that is the deciding factor.

What’s Required to Get a Crypto License

The Central Bank of Republic of Bahrain (CBB) oversees the licensing process. Applicants must be registered in Bahrain and maintain a physical office. They must also meet capital requirement lists that vary depending on the nature of the crypto-activity. For example, custody providers are expected to hold higher minimums than companies operating exchange platforms.

Among the key conditions for ideal business-activity are:

  • clear AML/KYC policy;
  • robust data protection procedures;
  • appointed compliance officers.

CBB also carries out detailed checks on shareholders and directors.

Two Types of Licenses, One Regulatory Body

Bahrain currently offers crypto-licenses for two main categories: exchange services and custody services. Each comes with distinct operating thresholds and supervisory expectations.

Cryptocurrency exchanging places must demonstrate the ability to handle fiat-to-crypto and crypto-to-crypto transactions securely. Custodians, meanwhile, are expected to implement multilayer protection for clients’ digital assets and provide detailed service-level agreements.

Companies offering both services are required to apply for dual authorization, though the licensing track is managed through a single regulatory touchpoint – the central bank’s Financial Institutions Supervision Directorate.

The dual-track model, while rigorous, has made Bahrain a rare example of what regulators describe as “balanced facilitation” – offering access to crypto-markets without compromising oversight.

Why Businesses Are Choosing Bahrain

Bahrain’s appeal, industry analysts say, isn’t just its licensing model – it’s the country’s broader stance on innovation. The central bank has embraced fintech and blockchain pilot programs, and recently introduced a regulatory sandbox that allows firms to test crypto-payment services under controlled conditions.

Legal specialists working with digital asset clients say that Bahrain’s crypto and Forex license holders benefit from access to local banking partners, something still elusive in many other markets.

If you’re a crypto-company trying to open a corporate account in Europe, you might wait months. In Bahrain, the process can take less than a week – if you hold the license.

The Path to Authorization: A Step-by-Step Process

Getting licensed in Bahrain typically follows a five-phase sequence.

  1. Pre-application consultation with the CBB.
  2. Document submission, including AML policies, business plans, and legal structure.
  3. Evaluation of key persons and shareholders.
  4. Regulatory sandbox participation (optional but encouraged).
  5. License issuance and operational launch.

The entire process can take between 3 to 6 months. Companies offering wallet, exchange, or payment services must also register with the Ministry of Industry and Commerce and maintain annual reporting standards similar to those of traditional financial institutions.

Tax and Corporate Benefits

Crypto-businesses operating under a Bahraini license do not pay income tax, capital gains tax, or VAT on crypto-transactions. The country’s zero-tax environment is a major draw for international firms seeking to structure blockchain and digital asset ventures efficiently.

The absence of tax on digital transactions applies broadly to licensed entities offering crypto-exchange, wallet, or payment gateway services – provided they comply with CBB reporting rules and maintain local incorporation. It’s one of the only jurisdictions in the region where you get legal certainty, full licensing, and no corporate tax. That combination is rare.

Costs: What a Crypto License in Bahrain Really Requires

The actual cost of the option to obtain a crypto-license in Bahrain varies. Application fees typically range from BHD 1,000 to 3,000 (about $2,600 to $7,900). But legal and compliance costs can push the total price higher.

Set-up costs often include:

  • legal consultation: from $25,000;
  • office lease and staffing: $15,000-$25,000 per year;
  • AML software and audit setup: $5,000-$10,000;
  • Annual regulatory fees: up to BHD 5,000 ($13,000+).

For companies eyeing long-term expansion in the region, those figures are manageable – particularly when compared to neighboring countries where licensing paths remain under development or tied to semi-governmental free zones. Bahrain’s model, by contrast, is centralized, bank-integrated, and built on existing financial regulation.

If you’re ready to explore licensing opportunities in Bahrain or need help navigating the application process, contact us today. We can also offer plenty of companies and licenses for sale. Our team can connect you with local legal experts and guide you through every step – from paperwork to launch.

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