Banks and Cryptocurrencies Global Evaluation: The Middle East

Arab markets were flooded with new investors in April after an Islamic scholar announced cryptocurrency is halal under Sharia law. The announcement settled contradicting statements issued by several other Islamic experts, but there are still conflicting interpretations of Sharia’s allowance of virtual currencies among Muslim leaders.  

The mufti’s announcement opened crypto markets to potentially 1.6 billion new customers, but it is certain that Middle Eastern governments will play a central role in the development of the crypto industry in order to ensure individuals and institutions adhere to Sharia law.

Sharia law places strict guidelines on economic activity whereby value must be attributed to real, physical assets. The highly contested religious law that governs the Islamic finance sector also prohibits market speculation and collection of interest on loans.

Muslim entrepreneurs, investors, and governments are intent on being leaders in the competitive global marketplace. As many advocate to replace the U.S. dollar as the global reserve currency, Bitcoin and nationalized cryptocurrencies may finally offer Muslim countries economic stability and leeway in Western politics.

It’s an unlikely coincidence that the Islamic Council on Sharia Finance broadly legalized gold ownership for investments around the same time that OPEC and Middle Eastern countries began moving away from the U.S. PetroDollar system in 2016.

Iran, which no longer recognizes or uses the U.S. dollar, and Turkey both announced plans to release government issued digital currencies following the pre-sale of Venezuela’s national, oil-backed currency Petro, earlier this year.

In fact, President Nicolas Maduro of Venezuela called on all 14 OPEC nations to develop a platform for trading oil-backed cryptocurrencies. Just as Venezuela launched its own cryptocurrency to circumvent U.S. sanctions, other oil-producing countries have hinted at abandoning the PetroDollar system that has been operating in the Middle East for over 40 years — threatening the global supremacy of the U.S. dollar.

The following assessment of cryptocurrency regulation in the Middle East is a part of a larger series of pieces evaluating regulation of the flourishing global fintech industry. Part one of the series looks at activity in Asian hotspots like Japan, Hong Kong, Singapore, and Taiwan, and how governments are facilitating or hindering growth. Part two examines crypto regulation and the critical attitudes held by many European leaders. Part three analyzes the varying attitudes of Western leaders on the disruptive new technology, and how regulatory agencies in the Americas are preparing for mainstream adoption of cryptocurrency. Part four assess how African countries are embracing the economically- and politically-liberating force of cryptocurrency and Blockchain.

The list below is based on thorough news research, but should in no way be considered complete. If you have more detailed information on banks and the crypto relationship in your country, we encourage you to share it in the comment section.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, and you should conduct your own research when making a decision.

LEGEND

Saudi Arabia

Saudi Arabia, a key player in the U.S. PetroDollar system, has continuously sold off its foreign exchange reserves ever since the price of oil plummeted in 2014. Saudi regulators are taking a close look at cryptocurrencies, but have yet to propose regulations. Many say an outright ban is unlikely.

The Saudi Ministry of Communications and Information Technology announced the agency completed a three-day “Blockchain bootcamp” in May as part of its plan to create a “digital environment” to leverage the kingdom’s untapped Information and Communications Technology (ICT) potential. The ministry partnered with Blockchain technology company ConsenSys for the event, and focused on Ethereum smart contracts and building decentralized applications.

The Saudi Arabian Monetary Authority also partnered with Ripple in February and launched a

pilot program that will provide cross-border payment technology to banks in the kingdom. The program is the first of its kind to be coordinated by a central bank, and will be accompanied by a regulatory sandbox, program management and training.

Oman

The Omani Blockchain Symposium, held at the end of last year, was the country’s largest business gathering, with nearly every government cabinet member in attendance, as well as 700 attendees from the private sector.

The Central Bank of Oman, as well as the Central Monetary authority, promoted the successful event and indicated that the government will aid in providing the technological infrastructure to promote the implementation of blockchain technology in Oman.

The Blockchain Solutions and Services Company (BSS),