After much hesitation, the Egyptian authorities seem to pave the way to the legalization of the use and trade of crypto-currencies in the country.
Egypt could ease its cryptocurrency restrictions with the new banking bill designed by the Central Bank of Egypt (CBE). By the end of May 2019, CBE was working on a bill on cryptography activities. Once introduced, it will require the country’s financial institutions to obtain prior licenses for the creation, advertising or exploitation of platforms that issue or facilitate the trading of cryptocurrencies. Licenses will be issued by the CBE Board of Directors. This is the first step of the Egyptian government towards the legalization of cryptocurrency related activities.
Scepticism surrounding the use of crypto-currencies in Egypt
The Egyptian state’s attitude towards the financial structures has always been volatile. Bitcoin and other crypto-currencies began to be widely discussed in 2015, when the startup launched a bitcoin voucher service. In fact, it was the first service in the Middle East and North Africa region that allowed Egyptian citizens to buy bitcoins for the national currency using vouchers.
According to the creator of the service, David El Achkar, only 10% of Egyptian citizens had bank accounts. He therefore considered the possibility of widespread use of bitcoin and other cryptocurrencies in the country. Therefore, crypto-currencies have quickly become popular among citizens, partly because of the country’s volatile financial situation. But even then, the country’s government was rather sceptical about new technologies and digital currencies because of a misunderstanding of the essence of this technology.
The scepticism was later confirmed in July 2017, when the Egyptian government took strong measures to indicate that cryptocurrencies posed a certain risk, as they could be used by terrorist groups to fund their activities anonymously.
The new bill of law could change the situation
“The bill gives the board of directors of CBE the right to define rules governing the trading of crypto-currencies,” an official CBE source said in a statement to the MENA news agency on Tuesday, according to Egypt Independent. However, the report did not provide any further details, while the EPC was not available for comment. Nevertheless, if the report is true, could this be another sign that the Islamic world is opening to crypto-currencies? How could this affect the cryptography industry and the market?
The legalisation of crypto-currencies has been discussed for years, but Egypt has banned all of them under the Islamic law in early 2018, because of their concern about possible fraud, such as tax evasion or money laundering. But at the end of last year and earlier this year, many reports revealed that the country had started experimenting with the block chain.
The new Egyptian bill recognizes the relevance of financial technology companies, wanting the country to keep up with the pace of the world’s modern financial and banking technology. The law would also provide a legal basis for the settlement, issuance and circulation of electronic checks and electronic reduction orders.
The growing interest in crypto-currencies could be to some extent provoked by some form of government FOMO (fear of missing out), while other countries in the region, including the Islamic states; have deepened their exploration of digital assets. Earlier this month, for example, BitOasis, a Dubai-based crypto-currency clearing house, got approval in principle from local regulators. Meanwhile, some foreign platforms, such as CoinField and SpectroCoin, are already offering ways to buy cryptocurrencies in Egypt.