United Arab Emirates (UAE) Central Bank Governor Mubarak Rashid al-Mansouri has issued a warning to the public against the use of virtual currencies as a medium of exchange.

He claims that digital currencies pose risks to the public as they can be utilized for such illegal acts as money laundering and funding terrorist activities.

According to a Gulf News report, al-Mansouri stated that the risk of trading cryptocurrencies is real as shown in the sharp decline in their prices following the announcement of a ban on initial coin offerings (ICO) by several countries. He made the statement during his speech at the Islamic Financial Services Board Summit in late October 2017.

“The risks of trading in digital currencies have clearly appeared when the prices of digital currency fell sharply after some countries announced a ban on using initial coin offerings.”

Efforts to control cryptocurrency use

The statement made by the UAE Central Bank governor reflects the positions of other regulators around the world who hope to discourage the use of virtual currencies like Bitcoin and Ethereum. Several countries, meanwhile, have already issued a ban on ICOs, which is a form of fundraising using digital currencies.

In the UAE, the central bank had rejected proposals to issue licenses for the trading of virtual currencies in the country. This has prevented the cryptocurrency exchanges to offer their services locally.

In his comment on the developments, the head of asset management at the Emirates Investment Bank claimed that virtual currencies are highly speculative.

“The digital currencies are highly speculative and this is not backed by anything tangible.”