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Bahraini bank launches Gulf’s first bitcoin investment fund

The National Bank of Bahrain says its bitcoin fund will protect investors from losses Unsplash+/Getty
The National Bank of Bahrain says its bitcoin fund will protect investors from losses
  • Bahrain’s first bitcoin fund
  • Guarantees loss protection
  • For ‘risk-averse investors’

The National Bank of Bahrain has launched a bitcoin-pegged structured investment product, aimed at targeting growing demand for the cryptocurrency among institutional investors in the Gulf countries. 

The fund, developed in partnership with digital asset firm ARP Digital, will offer investors access to any rise in bitcoin’s price, capped within a predetermined threshold, and guarantee 100 percent loss protection in the event of a decline.

The bank said in its release that the product is geared towards “risk-averse investors seeking exposure to bitcoin, while fully insulating their principal investment from market fluctuations”.

Abdulla Kanoo, co-chief executive officer at ARP Digital said the product “opens new doors for investors seeking a calculated approach to digital assets.”

Although lagging behind its neighbours in terms of volume, Bahrain has been an early adopter of crypto banking regulation, and the Central Bank of Bahrain (CBB) announced a legislative framework to oversee and manage crypto assets in the kingdom in 2019.

The same year, Rain Financial was the first company to receive a licence to operate as a crypto asset service provider in the kingdom.

Since then, Bahrain has given licences to operators including CoinMena and, most recently, BitOasis.

In March 2022 the CBB licensed Binance, which was one of the biggest crypto exchange platforms internationally. 

Last month Crypto.com was granted a licence by the CBB to operate in the country. 

“Bahrain has been working to create an innovation-friendly crypto and fintech ecosystem, which has involved putting in place clear regulation that balances consumer protection with commercialisation,” Eric Anziani, president and COO of Crypto.com, said following the approval. 

The Middle East and North Africa region is ranked as the seventh-largest crypto market globally in 2024, according to a report by Chainalysis. It accounted for 7.5 percent of global cryptocurrency transaction volume between July 2023 and June 2024, totalling $339 billion.

Arushi Goel, policy lead for the Middle East & Africa at Chainalysis said: “Traditional financial institutions are increasingly embracing digital assets, a trend gaining momentum worldwide. This announcement offers investors regulated Bitcoin exposure while maintaining robust safeguards, effectively bridging the gap between conventional finance and the crypto world.

“Such initiatives not only broaden investment options but also introduce a stabilising influence on the historically volatile crypto market.

“As banks innovate within established frameworks, we are likely to see the development of more sophisticated risk management and trading infrastructure, paving the way for wider adoption of digital assets.”

Most of the activity in the region is driven by institutional and professional-level activity, the report said, with 93 percent of value transferred consisting of transactions of $10,000 or more.