In a groundbreaking move for the region, the National Bank of Bahrain has unveiled the Gulf’s first bitcoin-pegged structured investment product, aimed at catering to the growing demand for cryptocurrency investments among institutional players. This innovative fund is designed to attract “risk-averse investors” seeking exposure to bitcoin without the associated volatility.
Developed in collaboration with ARP Digital, a leading digital asset firm, the new bitcoin fund allows investors to benefit from potential price increases of bitcoin while capping gains within a predetermined threshold. Most notably, the product guarantees 100% loss protection, ensuring that investors’ principal amounts are insulated from market fluctuations.
“The launch of this fund opens new doors for investors seeking a calculated approach to digital assets,” said Abdulla Kanoo, co-CEO of ARP Digital. This initiative aligns with Bahrain’s ongoing efforts to foster a crypto-friendly environment and enhance its reputation as a regional fintech hub.
Although Bahrain’s cryptocurrency trading volume lags behind its neighbors, it has been a pioneer in crypto banking regulations. The Central Bank of Bahrain (CBB) introduced a legislative framework to regulate crypto assets as early as 2019. That same year, Rain Financial became the first company licensed as a crypto asset service provider in the kingdom, paving the way for subsequent licenses granted to operators such as CoinMena and BitOasis.
In March 2022, Binance, one of the largest global cryptocurrency exchange platforms, received licensing from the CBB. Most recently, last month, Crypto.com secured approval to operate in Bahrain, further solidifying the kingdom’s status as a crypto regulatory leader.
Eric Anziani, president and COO of Crypto.com, commented, “Bahrain has been working to create an innovation-friendly crypto and fintech ecosystem, which involves implementing clear regulations that balance consumer protection with commercialization.”
According to a report by Chainalysis, the Middle East and North Africa region ranks as the seventh-largest crypto market globally in 2024, accounting for 7.5% of the global cryptocurrency transaction volume—totaling approximately $339 billion between July 2023 and June 2024.
Arushi Goel, policy lead for the Middle East & Africa at Chainalysis, noted, “Traditional financial institutions are increasingly embracing digital assets, a trend gaining momentum worldwide. This announcement provides investors with regulated Bitcoin exposure while maintaining robust safeguards, effectively bridging the gap between conventional finance and the crypto world.”
Goel emphasized that such initiatives not only broaden investment options but also contribute a stabilizing 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.”
With 93% of the crypto activity in the region driven by institutional and professional-level transactions of $10,000 or more, the launch of Bahrain’s bitcoin investment fund marks a significant step towards integrating digital assets into the mainstream financial landscape.
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