The Middle East looks to play catch up in terms of regulations
The Middle East region has seen limited progress in terms of crypto adoption. The region continues to lag behind Europe and Asia in terms of setting up its own exchanges. Despite this, there have been some inroads made during 2021.
Several central banks in the Middle East have started to test their own digital currencies, indicating that the future may be bright. However, there is a long way to go in terms of creating regulations for the existing cryptocurrencies.
This blog discusses the current state of crypto regulations in the Middle East.
Historically, there has been little progress in terms of developing crypto regulations in the Middle East. In fact, Bahrain and the UAE have been the only two countries to develop clear regulations governing digital assets. In 2019, Bahrain published a regulatory module governing crypto assets. Their government made the dealings of crypto-centric businesses legal with the due permission of the Central Bank.
Similarly, in the UAE, a regulatory body known as the Abu Dhabi Global Markets issued a comprehensive layout on the regulations to be followed while carrying out crypto-related transactions. The Dubai Multi Commodities Centre has also termed cryptocurrencies as a commodity and opened the avenues for businesses holding a DMCC issued a license to trade in this commodity. All other countries in the Middle East region have either deemed crypto assets to be illegal or are yet to develop clear regulations.
At present, the vast majority of the population in the Middle East is missing out on crypto investments due to a lack of clarity in terms of regulations. Countries such as Turkey have witnessed the rise of certain crypto exchanges, including BTCTurk. However, such instances are few and far between. This is because investors in this region continue to be unsure whether crypto is legal. With the exception of Bahrain and the UAE – the other countries in this region need to focus on developing compelling regulations governing cryptocurrencies.
It is likely that Middle Eastern governments will come up with crypto regulations sooner rather than later. This is because of the growing penetration of such assets within the region. Countries such as the UAE and Bahrain are already leading the way and others like Saudi Arabia are also likely to follow suit. Further, the formal launch of local digital currencies is also likely to boost the crypto industry in this region.
It is evident that the Middle East needs to do more in order to ensure that crypto transactions are fully regulated. Although the market does not have too many local exchanges, it must find a way to stop the illegal transfer of funds, money laundering, as well as terrorist financing. The UAE and Bahrain have led the way till now, and others also need to chip in.
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