Oman’s capital markets regulator, the Capital Market Authority (CMA), is preparing regulations to allow and license crowdfunding platforms in the sultanate.
Crowdfunding is a way of funding start-ups, small projects and businesses by raising funds from a large number of people through licensed online platforms.
The CMA’s board of directors has approved the necessary amendment in the capital market legislations to license crowdfunding platforms in the sultanate, according to a press statement issued on Sunday.
The CMA acknowledged that the crowdfunding platforms are innovative instruments and financial technologies which enable entrepreneurs and micro, small and medium enterprises to get more appropriate financing mechanisms.
The CMA board emphasised the importance of launching such type of digital platforms for their significance as financing options for SMEs in the sultanate to enhance economic development, job creation and financial inclusion.
The market regulator noted that the regulations for the crowdfunding platforms are in their final stages of preparation.
‘The CMA will take into consideration, in setting out the rules, that they (crowdfunding platforms) will not be transformed into lending institutions in the conventional sense,’ the CMA said, adding that it will post the rules for public consultation and feedback.
The Capital Market Authority further said that it intends to license the first crowdfunding platform in Oman before the end of this year.
Crowdfunding is a fast growing financing industry and often used by start-up companies and SMEs as a way of accessing funds. It is an innovative way of raising funds for new start-ups and projects.
‘The CMA’s endeavour to launch and regulate crowdfunding platforms in Oman comes from the government’s efforts to provide financing facilities for SMEs and micro projects,’ the CMA said.
The launch of crowdfunding platforms may help in overcoming key challenges facing the SMEs and small projects, such as the banking sector’s reluctance to fund such projects due to the risks and lack of proper guarantees.