With many countries adjusting to accommodate cryptocurrency, many may see Qatar’s decision to ban cryptocurrency in Qatar entirely as quite shocking. This is surprising especially after Qatar expressed its interest in going completely digital when it comes to payments.
Regulations and Cryptocurrency in Qatar
The QFC (Qatar Financial Centre) is an independent body that provides jurisdictions for tax, business, and legal infrastructure for companies in the country. It declared a ban on all cryptocurrency services by financial institutions in December 2020. The QFC oversees financial services for complying businesses in Qatar. These companies can avail of reductions in tax, looser regulations, and more benefits if they work in accordance with the QFC. The QFC offers such services to help promote businesses in Qatar.
Working together with the Financial Action Task Force (FATF), the QFC decided to adopt stricter rules and regulations in order to adhere to a risk-based Anti-Money Laundering approach. This was prompted by the increased use of cryptocurrency in terror financing and money laundering by criminal organizations. Trading of cryptocurrencies is regarded as illegal in Qatar.
The QFC responded to the misuse of cryptocurrency in Qatar by announcing a blanket ban on all trades done with this medium. Cryptocurrencies like bitcoin have been deemed to be too volatile and can be hacked easily. There is no regulatory body that guarantees the reliability of cryptocurrencies. This makes them unreliable assets, due to the lack of accountability.
Transactions banned by the QFC
Its very obvious that a country aims to go viral in the form of digital currency. But cryptocurrency in Qatar transaction transactions is not allowed in the country. The ban includes the conversion of fiat money to crypto, as well as the crypto to crypto transactions. This means that people are unable to buy crypto and trade them for other assets, however, they may invest in them similar to stocks. The Central bank has also banned other financial institutions from processing any financial transactions using crypto. It is illegal to make any business transactions with crypto coins. Banks will flag transactions done in this manner as suspicious, which may lead to prosecution.
There are a few exceptions to this rule, such as security tokens and a few other virtual assets. These instruments must be in accordance with AML and KYC regulations of the QFCRA, Qatar Financial Markets Authority, and the Qatar Central Bank. Unlike security tokens, cryptocurrency in Qatar is not subject to the strict AML and KYC verification rules.
Anyone found violating the rules will face serious consequences. Financial sanctions, heavy fines, and imprisonment are just a few of the harsh punishments that lawbreakers will face. The current situation is that as the intention of Bitcoin will whole and solely replace the Cental Banking system will be a myth as more and more countries may impose a ban on the digital currency as a whole.
Qatar taking alternate steps
With many countries in the world beginning to take up stricter action against Cryptocurrency in Qatar trading is just the next in a number of countries to tighten the reins. The rising threat of financial crimes using cryptocurrency is becoming more difficult to detect each day. This is thanks to the introduction of anonymity-based cryptocurrencies. India and China have also refused to accept cryptocurrency as legal tender in their respective countries, meaning that people cannot use bitcoin to avail of goods and services.
On the other hand, Qatar has expressed interest in developing a FinTech strategy that will make digital transactions easier, preferably through mobile. It may also follow in the footsteps of India and China, which are currently developing stable coins. These will work as equivalents to fiat money. They are also working on a digital transactions system on the level of SWIFT.
Conclusion
So, It seems that cryptocurrency in Qatar will not be accommodating global cryptocurrency at the moment. However, it is not completely shutting itself down from adapting to the idea of going completely digital. Qatar is currently developing a digital payments platform specifically to combat the rising money laundering and terrorist funding in the country. This is being seen as a positive move from Qatar’s side.
