Stablecoins and the Future of Private Money: A Legal Perspective from Al Doseri Law

As part of the forum’s principal program, Saad Al Doseri, Founder of Al Doseri Law, delivered a comprehensive presentation on stablecoins designed to maintain price stability through various stabilization mechanisms, examining Bahrain’s pioneering Stablecoin Issuance and Offering (SIO) Module, promulgated by the Central Bank of Bahrain (CBB) in July 2025.

“Stablecoins represent a new form of private money and a major step forward in how we perceive value, trust, and currency,” said Saad Al Doseri. “By integrating the operational efficiency of distributed ledger technology with the stability of fiat-backed reserve assets, stablecoins create a nexus between technological innovation and practical financial utility, enabling enhanced transaction efficiency while maintaining value stability.”

He explained that stablecoins possess significant potential to facilitate cross-border payments, provide value preservation mechanisms in
volatile economic environments, and expand financial inclusion in emerging markets. However, their sustainable development is contingent upon maintaining an appropriate balance between technological innovation and prudential regulation, thereby ensuring transparency, consumer protection, and systemic financial stability in accordance with international best practices and Bahrain’s regulatory objectives.

Tracing the market’s development, Al Doseri noted that Tether (USDT), among the first major stablecoins launched in 2014, catalyzed an industry that now comprises over 100 active stablecoins, the majority of which utilize the Ethereum ERC-20 token standard.

Bahrain’s SIO Module: A Regional First

The Stablecoin Issuance and Offering (SIO) Module, promulgated by the Central Bank of Bahrain in July 2025, establishes a comprehensive regulatory framework for fiat-backed stablecoins in the Kingdom, encompassing licensing requirements, prudential reserve management standards, redemption rights, ongoing compliance obligations, and regulatory oversight.

Key provisions include:

Licensing Requirements: Local incorporation as a Bahraini Closed Joint Stock Company (B.S.C. (Closed)) with minimum paid-up capital of BHD 250,000 and appropriately qualified management personnel possessing the requisite expertise, competence, and fitness and propriety standards as defined in the applicable CBB regulations and the SIO Module.

Full-Reserve Mandate: Issuers must maintain reserves equal to 100% of outstanding stablecoin liabilities in highquality, highly liquid financial instruments denominated in the reference currency, with such instruments meeting the eligibility criteria specified in the SIO Module.

Segregation of Assets: Legal and operational separation of reserve assets from the issuer’s proprietary assets, with reserve assets held in segregated accounts and subject to restrictions on encumbrance, to protect stablecoin holders’ interests and ensure priority claims in the event of issuer insolvency.

Redemption Rights: At-par redemption of stablecoins within five (5) business days from the date of a valid redemption request, including during periods of market stress, subject to compliance with applicable anti-money laundering and counter-terrorist financing requirements.

Yield Distribution Framework: Permits distribution of yield to stablecoin holders derived exclusively from investment returns on reserve assets, subject to stringent prudential requirements, disclosure obligations, and risk management standards as set forth in the SIO Module and applicable CBB regulations, provided that such distributions do not impair the full-reserve requirement or compromise redemption obligations.

The SIO Module establishes Bahrain as the first jurisdiction within the Gulf Cooperation Council (GCC) to introduce comprehensive, dedicated regulatory provisions specifically governing stablecoin issuance and offering activities, thereby positioning the Kingdom at the forefront of digital asset governance in the MENA region.

Al Doseri Law, as a leading legal advisor in this domain, continues to provide comprehensive legal counsel and strategic advisory services to domestic and international clients navigating this evolving intersection of law, distributed ledger technology, and financial services, thereby facilitating compliant market entry and operational excellence in Bahrain’s progressive regulatory environment.

An Article From Al Doseri Law

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