Executive summary
This page provides an overview of crypto-asset transfer regulation and Travel Rule requirements in the Kingdom of Bahrain. It is intended for virtual asset service providers, financial institutions, and compliance teams operating in or interacting with the Bahraini market.
Bahrain is one of the earliest jurisdictions in the Middle East to implement a comprehensive regulatory framework for crypto-asset services. Under the Central Bank of Bahrain (CBB) Rulebook, Travel Rule obligations are embedded directly into the country’s financial-crime and capital-markets supervision. A defining feature of the Bahraini approach is the classification of all crypto-asset transfers as cross-border, regardless of the physical location of the parties.
This content is provided for informational purposes only and does not constitute legal advice.
Regulatory landscape overview
Bahrain’s crypto-asset framework is designed to mirror the treatment of international wire transfers in traditional finance. Rather than introducing a standalone crypto regime, the CBB integrated virtual assets into its existing prudential and AML/CFT architecture.
Key characteristics of the Bahraini approach include:
Early and explicit adoption of Travel Rule obligations
Treatment of all crypto transfers as cross-border transactions
Strong alignment with Financial Action Task Force (FATF) Recommendation 16
Progressive expansion of scope to include stablecoin issuance and settlement
This positioning has made Bahrain a reference point for crypto supervision in the Gulf region.
Supervisory and regulatory authorities
Travel Rule compliance in Bahrain is overseen through a centralised regulatory structure:
Central Bank of Bahrain (CBB): Primary regulator responsible for licensing, supervision, and enforcement under the Crypto-Asset (CRA) and Stablecoin Issuance & Offering (SIO) modules
Financial Intelligence Directorate (FID): National authority receiving and analysing suspicious transaction reports
All licensed crypto-asset service providers operate under direct CBB supervision.
Travel Rule status in Bahrain
The Travel Rule is fully implemented and strictly enforced under the CBB Rulebook.
Under the Bahraini framework:
Originator and beneficiary identification is required for crypto-asset transfers
Obligations apply irrespective of transaction value in practice
Crypto-asset transfers are treated as inherently cross-border for AML purposes
This approach results in a near zero-threshold operating environment for Travel Rule compliance.
Timeline and key milestones
February 2019: Introduction of the Crypto-Asset (CRA) Module
January 2020: Adoption of AML provisions explicitly addressing the Travel Rule
April 2023: Enhancements to client-asset protection and technology governance
2025–2026: Full implementation of the Stablecoin Issuance & Offering (SIO) Module
Thresholds and scope
Bahrain applies one of the most conservative threshold models globally.
Effective threshold: Zero (0 BHD) in practice
Rationale: Classification of all crypto transfers as cross-border
Scope: Applies to all CBB-licensed crypto-asset service providers, including exchanges, custodians, brokers, and stablecoin issuers
This structure significantly reduces the relevance of de minimis exemptions.
Required data elements (high-level)
For in-scope transfers, Bahraini regulations generally require information relating to:
The originator, including full name, wallet or account identifier, and additional identifying information
The beneficiary, including full name and wallet or account identifier
Information does not need to be transmitted on-chain, but must be exchanged immediately and securely between service providers using appropriate communication channels.
Local nuances and interpretive considerations
Several features of the Bahraini framework are particularly relevant for compliance teams:
Cross-border default: All transfers are treated as international, increasing scrutiny and retention requirements
Stablecoin coverage: Stablecoin issuance and transfers fall fully within the Travel Rule perimeter
Structuring risk: Firms are encouraged to collect data for all transactions to prevent evasion through transaction splitting
These elements reflect Bahrain’s conservative supervisory posture.
Self-custodied (unhosted) wallet considerations
Bahrain applies a pragmatic, risk-based approach to interactions with self-custodied wallets.
Transfers between a VASP and an unhosted wallet are permitted
When receiving funds from an unhosted wallet, the VASP is expected to obtain originator information from its customer and assess source-of-funds risk
Ownership verification is not universally mandated, but risk-based due diligence is expected
This balances operational feasibility with supervisory expectations.
Cross-border and interoperability considerations
As a first-mover jurisdiction, Bahrain places strong emphasis on managing the “sunrise issue.”
Key considerations include:
Enhanced scrutiny of inbound transfers lacking required information
Expectation that missing data will be requested and assessed before funds are released
Technology-neutral approach, provided data transmission is secure, immediate, and privacy-preserving
Interoperability with global counterparties is therefore a core compliance concern.
Indicative compliance readiness checklist
The following considerations are illustrative and non-exhaustive:
Active CBB licensing under the CRA and/or SIO modules
Ability to operate effectively in a zero-threshold environment
Processes for handling inbound transfers lacking complete data
Integration of blockchain analytics and sanctions screening
Record-keeping aligned with Bahraini AML retention requirements