Middle East to Get First Central Bank-Licensed Crypto Exchange By 2019
Rain Financial has opened its public waiting list after a year in the Central Bank of Bahrain's fintech sandbox.
Bahrain sandbox is a regulatory program where applicants experiment in a closely supervised environment before graduating to full-fledged licensed businesses.
Coming out of the Bahrain sandbox, the Rain platform become the first Central Bank-licensed retail crypto investment exchange in the middle-east.
Rain, co-founded by Saudi blockchain consultant Abdullah Almoaiqel and Egyptian investor-turned-meetup organizer Yehia Badawy, along with their business partners Joseph Dallago and AJ Nelson, says it aims to offer both a brokerage for retail crypto investors and an institutional platform along the lines of Coinbase Pro in Silicon Valley.
The company was the first to join the Bahrain sandbox in September 2017, and expects to launch in early 2019.
Speaking about the chances of the Rain platform to fly, Khalid Saad, CEO of Bahrain Fintech Bay, a non-profit co-working space for local startups, highlighted the unique strengths of the Rain platform. He said: “what is unique about Rain is they are the most advanced and the closest to graduating”. He added that there's no cryptocurrency exchange in the region that is officially regulated. Hopefully, Rain will be the first one.”
The Ripple Effect Of A Potential Rain Launch
If Rain makes it to launch, industry experts say it could encourage new capital flows into the crypto ecosystem from a part of the world rich in natural resources like oil and gas. As it stands, few Persian Gulf residents officially participate in the crypto markets, partly for fear of the sector's shadowy reputation (although Dubai has notably been a pioneer of “smart city” applications of blockchain technology).
Crypto-curious investors “are waiting for the right regulations to be in place and the right partners,” Rain co-founder Badawy said. “We are here to fill this demand, with institutional-grade infrastructure.”
So far, the Bahrain-based startup has attracted investors including crypto veterans such as Cumberland Mining founder Mike Komaransky, Bitcoin Core developer Jimmy Song and the crypto wallet startup Breadwallet.
Further, Rain has tapped Joseph Dallago, an alumnus of the crypto wallet startup Abra, to be its CEO.
Despite challenges faced by other cryptocurrency platforms in the region, Rain has been fortunate in that Bahrain is a really advanced and progressive regulator in the region. On top of that, the sandbox environment allowed the company to show the Central Bank of Bahrain how it would operate while limiting the damage should something go wrong.
“Whatever goes into a sandbox is designed to be small enough to fail, so that if it doesn't work out there is remediation available,” noted John Collins, a partner at the advisory firm FS Vector in Washington, D.C. and former head of policy and government affairs at Coinbase.
Aside from giving startups “a safe space to work with regulators,” Collins said, sandbox programs around the world are creating “regulatory bridges” across jurisdictions, such as the cooperation between the U.S. Commodity Futures Trading Commission and the U.K. Financial Conduct Authority.
“That's another added benefit, especially for crypto exchanges,” Collins told CoinDesk. “If you are able to be in a sandbox but interacting with any number of different regions at the same time, that is a uniquely good fit for a crypto product.”