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Middle East

Qatar announces ban on Cryptocurrencies

The Qatar Financial Centre (QFC) has recently announced that it has banned all cryptocurrency-related services and activities within the sector.

Following the raising of concerns by government officials, according to a report by Securities.io, over the potential for cryptocurrencies to facilitate money laundering and terrorist financing, the Qatar Financial Centre Regulatory Authority (QFCRA) has made the decision to implement an outright ban on “anything of value that acts as a substitute for currency, that can be digitally traded or transferred and can be used for payment or investment purposes.”

The QFCRA report explicitly stated that “Virtual Asset Services may not be conducted in or from the QFC at this time.”

The ban, however, has not been extended to security tokens, which ultimately remain unimpacted in the sector. The report has outlined that financial instruments which have been regulated by the QFCRA, the Qatar Central Bank, or the Qatar Financial Markets Authority are exempt from the ban, according to Securities.io.

Sheikh Abdulla bin Saoud Al-Thani, Governor, Qatar Central Bank, highlighted a number of reasons for the implementation of the ban. He stated that a “correlated effort” was needed in order to combat terrorist financing or money laundering, and that only an effective, strong regulatory and legislative framework can support effective AML and CTF efforts.

The move by Qatar to introduce a more strenuous regulatory framework arguably mirrors the efforts of numerous countries to introduce greater stringency around crypto currencies and assets. US lawmakers, for one, recently proposed legislation which would bring a greater proportion of the crypto market under regulatory jurisdiction.

With Qatar’s new legislation, however, there have been suggestions that the new regulation may have adverse effects. Crypto assets are often associated with the desire to maintain anonymity, and therefore this hinders how easily they can be regulated or monitored.

Qatar’s decision to introduce a blanket ban, therefore, may prove to be an interesting venture into regulating an asset which was first created to be untraceable.