Central Bank of Oman issues fresh warning over crypto, Ponzi risks

MUSCAT, OCT 10

The Central Bank of Oman (CBO) has once again urged citizens and residents to exercise caution when engaging in transactions involving the use of crypto-currencies, among other crypto assets, given the significance risk of fraud being uncovered in this decentralised finance space globally.

The warning comes amid a flurry of scams targeting cryptocurrency investors around the world. Just last week, Binance – the world’s largest cryptocurrency exchange – may have potentially lost hundreds of millions of dollars after a hack of its network, prompting the exchange to temporarily suspend transactions.

Earlier, in August, hackers siphoned off around $200 million in cryptocurrency from Nomad, a tool that lets users swap tokens from one blockchain to another. More recently, the US Treasury Department sanctioned Tornado Cash, a cryptocurrency anonymization service after it was reported that hackers used the service to launder billions in stolen cryptocurrency. Industry losses linked to scammers and hackers have so far totaled around $2 billion this year, according to experts.

“Be cautious of using cryptocurrencies, as well as other deceptive investment schemes that warn huge profits (Ponzi schemes),” Oman’s apex bank warned in a recent tweet.

In repeated advisories to the general public, the Central Bank of Oman (CBO) has been warning that it has not licensed any agency or bank to trade in cryptocurrencies in the Sultanate of Oman. Protections granted to investors under the Banking Law 112/2012 do not cover any digital or virtual currencies, as well as activities involving their usage, the banking sector regulator has frequently advised.

But given the explosive growth of crypto and virtual assets globally, regulators in the Sultanate of Oman are taking steps, albeit with a great deal of circumspection, to support the eventual legalization and regulation of some aspects of decentralized finance based products and services.

Earlier this year, the Capital Market Authority (CMA) said it was preparing to appoint a consultancy firm to advise the Authority on the drafting and implementation of a ‘Regulatory Framework for Virtual Assets (VAs) and Virtual Assets Service Providers (VASPs)’. The goal, it said, is to support the establishment of a legislative and regulatory framework for the regulation of Virtual Assets and the licensing, supervision and regulation of service providers.

Last year, the Central Bank of Oman announced that it had set up a high-level task force to study the complete gamut of issues encompassing the economic advantages – as well as risks – associated with any decision to authorise the use of cryptocurrencies in Oman.

Nevertheless, some leading government agencies have already taken bold steps to venture into the crypto space. Earlier this year, Oman Investment Authority (OIA), the integrated sovereign wealth fund of the Sultanate of Oman, took an equity stake in Crusoe Energy Systems Inc, a US firm that helps energy companies cut flaring by using stranded natural gas to power cryptocurrency mining instead.

More recently, Oman Water and Wastewater Services Company (OWWSC) and Digital Digits (Easy Coins) signed Memorandums of Understanding with Connected Chains to trial the use of cryptocurrency for payments. As part of the pilot, a cryptocurrency pegged to the value of the Omani Rial will be used for payments of dues from customers at select customer care centres of OWWSC, as well as online using EasyCoins’ Hasalah Digital Wallet.