MUSCAT: The Capital Market Authority (CMA) has formally launched a public consultation to elicit industry feedback on its intention to establish a new regulatory framework governing transactions involving Virtual Assets (VA) and the operations of Virtual Asset Service Providers (VASP) in the Sultanate of Oman.
The regulatory framework is proposed to cover activities and transactions involving crypto assets, tokens, crypto exchanges, and initial coin offerings, among other products and services that fall within the realm of virtual assets.
“The aim of this new framework is to establish a comprehensive yet adaptable regime for the rapidly evolving VA sector, that includes prudential and conduct of business requirements, as well as rules to prevent market abuse, including through surveillance and enforcement mechanisms, and around the issuance of virtual assets. The CMA is seeking to provide an alternative financing and investment platform for issuers and investors, while mitigating the risks associated with this VA class,” the market regulator set in an introduction to the initiative.
Encouraged to participate in the three-week-long public consultation are all relevant stakeholders, including VASPs, financial institutions, academics, legal firms, consumer groups and other businesses that may be impacted by the VA and VASP frameworks. The consultation paper can be downloaded from the Authority’s website (www.cma.gov.om), with responses emailed to: kemal.rizadi@cma.gov.om before August 17, 2023.
According to the CMA, Virtual Assets (also known as crypto assets) refer to any digital representation of value that can be digitally traded, transferred or used for payment. Not included in the category of VAs are digital representation of fiat currencies, securities, and other financial assets that are already covered by other regulatory frameworks.
Significantly, Oman joins a growing list of jurisdictions globally that are moving to regulate crypto asset-based activities. According to the Financial Action Task Force (FATF), a global agency tasked with fighting money laundering and terrorist financing, Virtual Assets are vulnerable to cyberattacks and scams if unregulated. They also risk become a safe haven for the financial transactions of criminals and terrorists.
The International Monetary Fund (IMF), citing the findings of the Bank for International Settlements (BIS), warned earlier this year that crypto assets have lost trillions of dollars in market value during periods of extreme volatility. Bitcoin, the biggest of cryptocurrencies, is down by two-thirds from its late 2021 peak, with about 75 per cent of investors having lost money on it.
Importantly, the CMA says it also intends to strictly prohibit the issuance of ‘privacy coins’ – also known as anonymity-enhanced cryptocurrency. “Privacy coins are VAs that allow for reduced transparency and increased obfuscation of financial flows and have been linked to illicit activity such as money laundering and organised crime,” the Authority warned.
Also slated to be outlawed are activities linked to ‘privacy coins’, such as the use of tumblers, mixers, privacy-enhanced wallets and other technologies that obscure the identity of the sender, recipient, holder, or beneficial owner of a VA, it noted.
Furthermore, Virtual Asset Service Providers (VASP) operating in Oman will be required to have a local presence in the jurisdiction through a legally established entity and a physical place of work, the Authority added.
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