Crypto-currencies, which reportedly have generated fabulous returns — and losses as well — for investors elsewhere around the world, do not currently pose any risk to the Sultanate’s financial sector, according to the Central Bank of Oman (CBO).
The apex bank stated in its 2019 Financial Stability Report, issued here recently, that its strong advocacy of modern technology and trends in the development of Oman’s banking and financial services industry, does not signal an automatic endorsement of inadequately regulated crypto-currencies and other such financial technology (fintech) based products.
It explained: “The CBO supports the use of cutting-edge technology by the banking sector to make provision of financial services more efficient, user friendly, and cost effective. While it facilitates the use of advancements in technology by issuing the necessary frameworks, approvals, and regulations, CBO does not endorse crypto-currencies or other fintech-based assets that have weak governance or are speculative in nature. Due to this cautious approach, crypto-currencies lack the volume to pose any risk to the Omani financial sector.”
From the standpoint of Oman’s regulatory authorities, investments in crypto-currencies are neither authorised nor illegal at the current juncture in the Sultanate. Investors bear sole responsibility for their investment decisions related to such products, say market experts.
There is anecdotal evidence that investment interest in crypto-currencies is modest at best, with trading volumes still relatively negligible. In the circumstances, local authorities have adopted a cautious approach, while waiting to see how other jurisdictions in the region, and elsewhere around the world, address the question of regulating crypto-currencies.
Earlier, in June, a top official had announced that the Central Bank of Oman has constituted a task force to formulate a comprehensive strategy to support the growth and uptake of financial technologies in the Sultanate.
The task force’s remit, the official said, covers the complete spectrum of emerging technological trends and developments that have implications for Oman’s banking and financial services industry.
But the bigger concern for the Central Bank stems not so much from crypto-currencies, as from the threat posed by cyber-attacks — the incidence of which has grown globally. Such attacks, it warns, can be very disruptive given their potential to not only “interrupt the delivery of financial services but also undermine confidence in the financial system”.
Pledging heightened vigilance in this regard, the Central Bank of Oman added: “The Omani financial sector has not experienced any major cyber-attack. Nevertheless, like any other jurisdiction, it remains vulnerable to such attacks. To further bolster the existing cyber security measures, CBO is set to collaborate with the domestic and international partners to strengthen the capacity of the financial sector to mitigate and recover from cyber-attacks.”
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