Dina Sam’an, CEO of Bahrain-based digital assets exchange CoinMENA, on its launch and the rise in confidence in cryptoassets as a store of value.
On March 11, 2021, Bahrain-based CoinMENA launched its fully regulated, sharia-compliant crypto-exchange. This will allow customers to buy and sell cryptoassets in their local currency, such as the Bahraini dinar, Emirati dirham, Kuwaiti dinar, Omani rial and Saudi riyal, in the Middle East and north Africa (MENA) region. The exchange, which is licensed by the Central Bank of Bahrain (CCB), offers five cryptocurrencies on its platform: bitcoin, bitcoin cash, ether, litecoin and XRP. It also offers an over-the-counter desk for individuals and institutions looking to buy and sell large orders of digital assets.
Q: Why is 2021 a good time to launch a new crypto-exchange in the Gulf Co-operation Council (GCC) region?
A: The global cryptoassets industry has witnessed an unprecedented boom since the outbreak of the global Covid-19 pandemic and, as a result, had one of its best years on record in 2020. This can be attributed to several underlying dynamics that have positively and permanently changed the industry.
As countries are still reeling from the pandemic, governments have launched massive stimulus packages to shore up their economies. This sheer increase in money circulation could lead to purchasing power being diminished, which has positioned cryptoassets such as bitcoin as an ideal and increasingly attractive store of value. Furthermore, more institutions are investing in and adopting cryptoassets as an alternative payment mechanism. Even central banks and regulators are studying the industry, rolling out regulatory frameworks and working on digital currency projects.
If we look at bitcoin specifically, the cryptocurrency halves every four years leading to its increased scarcity. [The last halving was in 2020]. These dynamics are already making 2021 a strong year for cryptoassets.
Our objective as an exchange is to unlock access to cryptoassets in the MENA region for individual and retail investors
The appetite for cryptoassets in the GCC and wider MENA region is at a record high. This makes 2021 the ideal year for CoinMENA to launch its operations. As one of the very few exchanges globally that is fully regulated and offers clients in the region the opportunity to invest via their local fiat currencies, we are positioning ourselves very strongly to serve this rising demand.
Q: What makes Bahrain a suitable base?
A: Bahrain is home to one of the most established and diverse financial services industries in the MENA region. Boasting a progressive economy that welcomes investments, the country has been nurturing its increasingly digital and innovation-led economy through different initiatives, such as its cloud-first policy and the development of a leading and vibrant fintech ecosystem.
The central bank, CCB, which is a robust and respected regulator, has been one of the key and influential stakeholders in such developments. The CBB has developed a broad regulatory framework that welcomes innovation, alongside comprehensive and accommodating supervision. Within this framework are dedicated, extensive and clear regulations for cryptoasset companies, which are considered among the best in the world. Additionally, these regulations are onshore.
The combination of these different factors, and the fact that Bahrain remains the only regional jurisdiction that has such a framework for cryptoassets, made it the natural and ideal choice for CoinMENA.
Q: Who are your intended clients?
A: CoinMENA serves both retail and institutional investors in the MENA region. Whether you are just starting out and would like to partake in the digital economy, or are more a seasoned investor and would like to diversify your portfolio, you will be able to achieve that through investing in cryptoassets. The investor base is growing rapidly and significantly aided by several of the aforementioned underlying dynamics, which CoinMENA is capitalising on.
Q: What success have you had so far in terms of volumes and values?
A: Since our launch on March 11, we have witnessed tremendous interest from investors who are seeking to enter the cryptoassets market via a fully regulated and sharia-compliant exchange. This is also coupled with very strong growth in the number of sign-ups to our platform, where customers can onboard with ease, enjoy same-day verification and benefit from a two-way referral programme.
Alongside more sign-ups, our trading volume has been increasing exponentially and across all the different markets we serve. The cryptoassets industry has been enjoying favourable dynamics and the outlook for 2021 is very positive, which we are confident will allow us to grow CoinMENA significantly over the upcoming months.
Q: What is the importance of CoinMENA’s service being sharia-compliant?
A: Our objective as an exchange is to unlock access to cryptoassets in the MENA region for individual and retail investors. To ensure that we can make this asset class available to all and meaningfully address a key gap in the regional market, it is imperative that we also cater to those investors that are sharia-conscious and would only invest via platforms and in instruments that are compliant. Consequently, CoinMENA has successfully undergone an extensive sharia-compliance certification process by the Shariyah Review Bureau that enables service to all investors.
Q: What is CoinMENA’s response to the scepticism about cryptocurrencies still held by major financial institutions?
A: Compared to the traditional financial services industry, the cryptoassets industry is relatively nascent. It is an industry that, to date, is predominantly misunderstood by many, including some of the major financial institutions. Comparisons to traditional fiat currencies and highlighting that cryptoassets are volatile, lack intrinsic value, and are a bubble is not accurate and add to such misunderstanding.
Cryptoassets was the best-performing asset class in 2020; and 2021 is already outperforming the previous year
In fact, cryptoassets boast many of the advantages of fiat currencies, in addition to being highly divisible, secure, scarce and decentralised, and have enjoyed significant upside in value over recent years. In fact, crypto was the best-performing asset class in 2020. Building awareness around the fundamentals of the industry, its transformational potential and applications will take time, but is essential.
Over the past year, many leading global institutions, including those in finance, have been embracing cryptoassets, rolling out related services and facilitating their use. This list includes Visa, Mastercard, Goldman Sachs, Morgan Stanley, BNY Mellon, PayPal, Square and Tesla. This is coupled with many regulated investment firms investing in cryptoassets and launching associated products. More are expected to follow suit in the near future and this will ultimately create a ripple effect and the momentum to take this industry more mainstream.
Q: Why did you decide to launch a fintech in the cryptoasset space?
A: As a firm believer in the transformational impact of cryptoassets on the financial services ecosystem, and having witnessed significant adoption and investments into cryptoassets by global investors, including some of the largest financial, technology, and industrial institutions, the path forward was very clear.
As mentioned, cryptoassets was the best-performing asset class in 2020; and 2021 is already outperforming the previous year. Regionally, there is a growing appetite from investors to invest in this new asset class to be part of this transformation and diversify their portfolios.
There is a market gap for customers who are seeking to access cryptoassets with increased ease and trade in their local currencies via a well-governed and regulated exchange. Leveraging the expertise of a founding team who are pioneers in the regional crypto and blockchain industry, CoinMENA was launched to bridge the gap for the market and become an influential player in the industry.
Q: What are your future plans?
A: CoinMENA’s mission is to become the leading cryptoassets company in the region and one that is recognised globally.
One of our key objectives is to deliver cryptoassets with increased ease to our regional customers. In addition to the five jurisdictions that we are serving since our launch — Bahrain, Saudi Arabia, the UAE, Kuwait, and Oman — we will be expanding our geographic coverage to include other key markets in the MENA region. Subsequently, we will look to expand outside of the region, while widening our product offering to include other globally proven and stable cryptoassets.
