For a country that is striving mightily to go digital when it comes to financial services, it may be a bit curious that Qatar has seemingly put the brakes on cryptocurrencies.
Maybe not.
As was reported Monday (Jan. 6), the Middle Eastern country said through the Qatar Financial Centre Regulatory Authority (QFCRA) that crypto asset services may not be conducted in or from the Qatar financial center.
As noted via tweet from the authority, there will be penalties imposed on firms that provide such services in the financial center. The authority has said virtual assets are anything “of value that acts as a substitute for currency that can be digitally traded or transferred and can be used for trading and investment purposes, excluding fiat currencies and other monetary instruments.”
The financial center operates with its own legal, regulatory and tax infrastructure and traces its roots back to 2005. The new ban states virtual asset services include the exchange or transfer of virtual assets, or the exchange between virtual assets and fiat currencies.
As reported by the Gulf Times, the Qatar Central Bank adopted new regulations in December that focus on combating money laundering and terrorist financing.
With the ban, Qatar becomes the latest in a string of countries that have put brakes on the promotion of financial services tied to cryptocurrencies. India, of course, has said financial firms cannot provide such services, and China has banned the operation of domestic exchanges.
Back in 2018, Qatar’s central bank banned bitcoin trading in an effort to “ensure the safety of the financial and banking system,” as reported in The Peninsula, Qatar’s daily newspaper,
It should be noted that Qatar has been vocal about developing a FinTech strategy that will bring digital efforts and innovation to financial services. The QFCRA said in September, “under new rules and guidance, the activity of non-regulated Professional Services firms has been widened to FinTech Services Providers which includes … providing cybersecurity solutions, application programming interfaces (API), cloud computing, developing blockchain-based technologies, artificial intelligence (AI) and companies which provide a platform for facilitating real-time transaction capability of internet connected devices.”
In other words: Blockchain is seemingly in the mix; cryptos are not. We note, however, that the “virtual asset” definition offered up by Qatar details the all-digital trading “excluding fiat currencies or other monetary instruments,” which leads us to wonder whether there may be, down the road, an examination of fiat done digitally (such as is being mulled in China and elsewhere).
Time will tell, of course. But for now, the idea that bitcoin (and its brethren) will displace central banking and traditional financial services (even in the digital age), may be losing steam as more countries opt for outright bans.