The first central bank-backed crypto exchange in the Middle East to launch in 2019

Cezar Renta

Rain Financial, a company co-founded by Egyptian investor Yehia Badawy and Saudi blockchain consultant Abdullah Almoaiqel plans to offer an institutional platform and a brokerage for retail crypto investors.

After a year in the Bahrain fintech sandbox, Rain has finally opened its public waiting list. The Bahrain sandbox is a regulatory program where participants experiment in a closed environment before being promoted to licensed businesses. Rain Financial was the first company to join in September 2017.

In an exclusive interview with CoinDesk, CEO of Bahrain Fintech Bay, Khalid Saad said:

“What is unique about Rain is they are the most advanced and the closest to graduating,”

“There’s no cryptocurrency exchange in the region that is officially regulated. Hopefully, Rain will be the first one.”

Khalid added.

Right now, there’s only a limited number of Persian Gulf residents present in the crypto markets and one of the reasons is distrust of the cryptocurrency sector negative reputation. It’s safe to say a bank-backed crypto exchange could draw in new capital flows from this side of the world.

There are many potentially interested investors waiting for the right partnership opportunities and proper regulations to be established, according to Yehia Badawi.

So far, some well-known crypto veterans such as Jimmy Song, developer of Bitcoin Core, Mike Komaransky, founder of Cumberland Mining, and Breadwallet, a crypto wallet startup have invested in Rain Financial.

BitOasis, a leading digital asset wallet and exchange service in the Middle East & North Africa is active since 2015 and also a member of the Bahrain sandbox program.

Rain founders have been seeking support from institutional players from the region but the current regulations make it difficult to work with cryptocurrencies. Kuwaity regulators have practically banned institutional traders from operating with crypto assets.

In Saudi Arabia, the Monetary Authority declared earlier this year that “no parties or individuals are licensed” to trade Bitcoin in the country.

Rain co-founder Almoaiqel said:

“The primary concerns with the regulators in Saudi Arabia is with unregistered entities, (…) Some of the regulators are not aware that bitcoin payments are not really anonymous and there are ways to track these.”

Rain also says it managed to find banking partners to allow fiat-on ramps in local Gulf currencies after months of educating regulators about know-your-customer and anti-money-laundering protocols used by Western exchanges.

According to Almoaiqel, “Bahrain is a really advanced and progressive regulator in the region” which was definitely helpful. The sandbox environment has also proved valuable, demonstrating to the Central Bank of Bahrain how Rain can operate without real-world risks.

Compared to Middle Eastern countries such as Israel and Turkey, crypto adoption has been slow across the Gulf. Even so, Rain CEO Dallago told CoindDesk, Gulf residents appreciate universal assets more than retail investors in Western markets.

“We feel like the regional tastes really match up with the characteristics of bitcoin,” (…) There’s a lot of pent up demand in the region.”

, said Dallago.

Except for Saudi Arabia, more than half the population in the Gulf are immigrants and expats. Almoaiqel said “remittance is a huge use case here. The region has a high population of foreign workers.”

Estimating demand is difficult at the moment considering the uncertain regulatory climate. However, Rain’s co-founders seem to believe broader education could make investors more interested in working with cryptocurrencies. For this reason, they are organizing frequent local bitcoin meetups in the area, including an even at the Bahrain Fintech Bay headquarters that took place in July.

Almaiquel concluded:

“The point of these meetups is to educate people in the region about the benefits of digital currency. (…) It’s our duty to counterbalance all the negative news about cryptocurrency scams.”