Bahrain-based cryptocurrency exchange Rain has raised $6 million in its Series A round of funding. The round was led by Middle East Venture Partners (MEVP) with participation from existing and new investors including Coinbase, Vision Ventures, CMT Digital Ventures, JIMCO and the DIFC Fintech Fund.

Founded in 2017 by four entrepreneurs, Abdullah Almoaiqel, AJ Nelson, Joseph Dallago and Yehia Badawy, Rain offers buying, selling and custody services for cryptocurrencies. It was the first crypto-asset platform in the Middle East to receive a licence in 2019 in Bahrain. The startups plans to use the investment to grow its engineering team, expand its presence across the Middle East and work with different regulators in the region to achieve its mission.

Riyad Abou Jaoudeh MEVP’s Junior Partner commented on the round, “As crypto assets continue to grow and transform into a recognised asset class, regional retail and institutional investors alike need a localised, safe, and regulated fiat-to-crypto rails. We are excited to back Rain Management, Mena’s first regulated crypto-asset company. This marks our first investment in Bahrain, a progressively regulated launchpad for GCC fintechs.”

Interest in cryptocurrencies has grown over the past few months following Bitcoin’s soaring value. Wamda spoke with co-founder Yehia Badawy to get a better understanding of why this has been happening.

Why is the value of Bitcoin soaring?

We saw this price activity [for Bitcoin] in 2017, there came a time when there was a big spike when it almost reached $20,000, there was a lot of interest then, then the price started to depreciate, reaching a low of $4000. Since then, the ecosystem has matured quite a bit in terms of the regulatory environment, in terms of institutional adoption. If you look at the pandemic, it has been a very good thing, it has accelerated a few things, PayPal is now supporting crypto, so is Square. This time around there is more mass adoption in terms of institutions supporting the ecosystem, making it more accessible. We’re seeing more players in the market.

Values are very subjective thing when it comes to crypto. One thing to note is that a lot of crytpo assets are decentralised and not just in design, but how they’re controlled. Their fate is controlled by participants that believe in them.

What is the level of interest like in the Middle East?

There is still a lot of education that needs to be done. As an industry we have to make it easier for people to understand crypto. That’s why as a company we understand regulatory compliance and having a way to regulate crypto is the way to start. We had two options when we started, go unregulated, set up an offshore company and serve clients in the region. But we’re big believers in the industry so we chose the tougher route: educate the regulators and try to get them to regulate this asset class. That’s what happened in Bahrain, we went to their sandbox, graduated and acquired the licence in July 2019.

We’re big believers in cryptocurrency as an asset class. It is important to talk to other regulators in the UAE, Saudi Arabia, Kuwait, Oman and Qatar and get this new asset class licensed and regulated in those jurisdictions. It requires education and collaborations with different partners in the ecosystem to educate them about how we apply compliance, anti-money laundering, CFD [contract for difference], the systems that exist today.

What are the benefits of cryptocurrencies?

Crypto is a very modern and innovative solution to several problems. Some people talk about ease of making payments, there’s less cost, less hassle and it’s more secure. There are other cryptocurrencies and assets like Ethereum where you can use the crypto to create smart contracts to enable distributed ledger technology and apps. This can give access and democratise new investment opportunities. It’s a good method of moving value from one place to another. Expats or migrant workers can use crypto to send funds back home to their loved ones, we know of people who are doing that. It is a very exciting ecosystem and we still have barely touched the surface of the system. But the tech behind crypto is still not at the level where it’s seamless.