Since the beginning of the year 2020, more precisely on, it seems that Qatar, a country in the Middle East with a population of more than 2.5 million people, has banned services related to crypto-currency offered in or from the Qatar Financial Centre.
Central Bank of Qatar: a warning in 2018?
According to financial sources and a circular seen by Reuters, in 2018, the Central Bank of Qatar warned the country's financial institutions not to trade in Bitcoin or other crypto-currencies.
In a letter sent to all banks operating in the country, the Central Bank of Qatar stated that trading in Bitcoin is not allowed in Qatar and that penalties will be applied if the circular is violated. The document stated:
'This cryptocurrency is very volatile and can be used for financial crimes and hacking and can be used to risk losing value because there are no guarantors or assets' Hence, the Central Bank: ' instructed banks and exchange houses in the country not to deal in any way with this currency, nor to exchange it with any other currency, nor to open accounts to process it, nor to send or receive money transfers for the purpose of buying or selling this currency'.
The central bank added that failure to comply with its request could result in sanctions in accordance with the provisions of the Law on the Central Bank of Qatar and the regulation of financial institutions issued by Law No. (13) for the year 2012 that: 'all Authorized Firms (as defined in the FSR) are not currently permitted to provide and/or facilitate the provision of Virtual Asset Services or otherwise exchange, trade or deal in Virtual Assets, until further notice.'
According to the Qatari daily The Peninsula, the decision was taken in order to 'guarantee the security of the financial and banking system'.
However, in the same year, on 4 September 2018, the government of Bahrain, a constitutional monarchy in the Persian Gulf, stressed the importance of the Blockchain for the country's economy. The Middle East seemed to be on the way to becoming the Blockchain's global powerhouse: From Dubai to Tel Aviv, the technology is being thoroughly researched and adopted.
For Bahrain, cry is like a commodity that can be traded on the stock exchange. An official of the government of Bahrain is quoted as saying 'From now on, we recognize cryptography as a commodity that can be traded on the stock exchanges. We do not consider it to be legal tender in any form'.
No trading or cryptos transfer
Qatar has joined a number of countries around the world that are implementing stricter laws to combat the illicit use of cryptography.
At the beginning of 2020, it is around the QFC regulatory authority to ban all cryptos related services. On Monday 6 January, the Middle Eastern country declared, through the Qatar Financial Centre Regulatory Authority (QFCRA), that cryptocurrency services cannot be carried out in or from the financial center of Qatar. The regulator clearly stated: 'Virtual asset services cannot be carried out in or from the QFC at the moment'.
Services include fiat-to-crypto and crypto-crypto trading, securities custody and financial services related to virtual assets, according to the statement.
The list of what you may not do in Qatar is as follows: the transfer of cryptos, custody and administration of encrypted currency and any financial instruments related to digital assets. However, all digital forms of securities and other financial instruments under the regulatory authority or the Central Bank of Qatar are still legal.
According to an article in Al-Watan, it is also known that Qatar has also recently implemented a national regulation on digital assets, specifically trying to combat terrorist financing and money laundering through virtual currency.
The reason for the regulator's decision is still unclear, but it can be said that Qatar has become the latest in a series of countries that have put a brake on the promotion of financial services related to cryptocurrency.
Written by: Laetitia Project Manager
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