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ARP Digital received a category-3 license from Bahrain Central Bank.
This marks the only over-the-counter (OTC) service provider with the license in the country that specializes in digital asset structure products.
Structured products have seen a "huge spike" in demand from institutional investors after the U.S. Securities and Exchange Commission's approval earlier this year of spot bitcoin ETFs.
Digital asset services firm ARP Digital, which boasts a former Goldman Sachs partner as one of its co-founders, received a license from the Central Bank of Bahrain to operate in the Middle Eastern country, providing services including crypto trading, custody, and portfolio management services to customers.
The firm got the category-3 license over the weekend and is the only over-the-counter (OTC) service provider focused on structured products that Bahrain's Central Bank regulates, ARP Digital said. Structured products, a very popular instrument in the traditional finance world, are usually geared towards investors who need customized investment products and typically include derivatives and other complex financial structures.
The Middle East and North Africa (MENA)-based firm said its products are catered to the sophisticated needs of high-net-worth, accredited, institutional and family office investors globally. ARP Digital will offer services to traditional-finance and crypto-native investors.
"The firm designs both off-the-shelf and customized investment solutions to ensure it can accommodate a broad range of market views expressed by its clients," the company said in a press release. "Moreover, ARP Digital aims at being inclusive to a wide range of clients by enabling multiple delivery and settlement options such as cash or kind settled OTC products, bankable structured notes, and fund products."
The management team includes co-founder Yusuf Alireza, who spent 20 years at Goldman Sachs and was the first-ever Arab partner in the Wall Street firm's history, according to his bio on the ARP Digital website. The other co-founders, Abdulla Kanoo and Abdulaziz Kanoo, were former regional directors for Amber Group’s crypto trading firm business in MENA.
The structured products industry in the digital assets market hadn't gained market share like traditional finance. However, there seems to be increasing demand from sophisticated investors for these kinds of financial products, particularly after the approval of spot bitcoin (BTC) exchange-traded funds (ETFs), ARP Digital's Abdulla Kanoo told CoinDesk.
"We've definitely seen a huge spike in demand from our distribution after ETF approval," Kanoo said. "We actually see a lot of demand from global firms who want to access it on the institutional side."
Bahrain has quickly become a crypto hub in the MENA region with its well-regulated ecosystem for both local and foreign digital-asset firms.
"The region stands to benefit from the growth and adoption of digital assets and has emerged as a global hub," Alireza said in an email.
"There has not been a technological development of this magnitude [digital assets] in the field of Financial Services in the last two decades. The leadership in MENA sees this potential and is positioned to emerge as a global powerhouse," he added.
Read more: DeFi’s Next Frontier: The Untapped Potential of On-chain Structured Products