The Outlooker 07

Egypt bans crypto-related activities not sanctioned by a license, with plans to issue its own coin in the future.

The Promontory

In 2018, Egypt’s Dar al-Ifta issued a religious decree that stated commercial transactions in Bitcoin are considered haram. The Islamic advisory mentioned that cryptocurrencies could pose as a risk to central financial systems and national security. However, a year later - the Central Bank of Egypt announced a law that only bans the creation, trading, and promoting of cryptocurrencies without a license. Shortly after, Ripple announced a partnership with the National Bank of Egypt. This partnership will facilitate remittance payments - enabling cross-border payments from the UAE. Despite Egypt's prohibition and hesitance towards cryptocurrencies, the country plans to develop its own coin.

Commercial transactions in Bitcoin are considered haram

Dar al-Ifta al Misriyyah is considered among the pioneering foundations for legal ruling under Islamic law. It was established as the premier institute to represent Islam and is responsible for ensuring that Muslims comply with religious principles. Egypt’s Dar al-Ifta issued a religious decree in 2018 that dictates the prohibition of commercial transactions in Bitcoin as haram. They deemed it as a risk to national security and financial systems in the country.

In 2019, the new banking law of the Central Bank of Egypt (CBE) banned the promotion, creation, and operation of cryptocurrency platforms without an appropriate license. The law grants the Board of Directors of CBE the power to issue rules governing the trading and dealing of digital assets.

cryptocurrency crypto Egypt Dar al-Ifta Bitcoin banking
The Egyptian Central Bank institutes a new banking law.

The new law is also meant to provide legal authority for electronic authentication of bank transactions, electronic payment orders, and transfer orders. These electronic means have the same validity as original papers, as long as they meet the technical criteria determined by the Board of Directors of CBE.

Egyptians rapidly purchase Bitcoin amidst new banking law

It's estimated that more than 1.7 million Egyptians are crypto holders - despite prohibition laws requiring a license. In 2020, Egypt reached a record breaking 2.2 million Egyptian pounds of P2P trading volume. The following year, user registrations rose by 250% on UK-based cryptocurrency exchange CEX.IO.

“There are no easy ways of purchasing crypto in Egypt. So any volumes that we see of people actively buying Bitcoin is even more memorable given how difficult it is to acquire it … they're buying it in this really painful way."

Hany Rashwan, Founder of Amun and 21Shares

Bitcoin trading volumes also rose by 400% from December to January, according to the firm's executive director. The dramatic spike in Bitcoin transactions were considered shocking, given the regulatory concern on crypto use. Bloomberg deemed January 2021 as the "best month within the last three years" in regards to new Egyptian users and trading volumes.

Egypt in the planning stages to launch own crypto coin

The Egyptian government has been highly cautious with regards to crypto trading, stating that it can be used for terrorist activities. Despite this concern, the CBE expressed that businesses should obtain licenses before participating in crypto-related activities. Sub-governor Ayman Hussein is working with President Abdel Fatah El-Sisi to transition Egypt into a cashless society. Additionally, talks are being held to issue a digital currency version of the Egyptian pound to help increase efficiency in transactions across nations and banks. Although its implementation would result in a 40% increase in Egypt's GDP, the CBDC still remains an idea.

The National Bank of Egypt turns to blockchain with Ripple

Ripple, a blockchain-based payments firm - signed a cooperation agreement with the Egyptian National Bank. This agreement is intended to establish new channels for inward remittances, paving the way for blockchain technology in Egypt. By fusing with the Ripple network, the National Bank hopes to access new markets while supporting remittance businesses in the Gulf region. Dalia El-Baz, the National Bank Chairperson - expects Ripple to boost foreign currency earnings. Not only will Ripple assist in making accessible and efficient cross-border payments, but the National Bank believes it'll also help to expand its customer base.

The Intel

The Egyptian government has deemed the use of cryptocurrency-related activities as haram in 2017. A year later, the Central Bank of Egypt announced a new law to ban crypto-related activities without licenses. Shortly after, the National Bank of Egypt partnered with Ripple to facilitate cross-border payments from the UAE to the African country. Despite the prohibition, Egypt is in the initial planning stages of developing their first digital currency. Though the country is strict to comply with religious ruling - financial freedom is considered an important factor for the economy and its citizens.

DISCLOSURE:

‌‌‌‌This content is provided for informational purposes only, and should not be relied upon as legal, business, investment, or tax advice. You should consult your own advisers as to those matters. Charts, graphs and references to any digital assets are for informational and illustrative purposes only.

Finblox Blog is associated with Finblox - a reliable cryptocurrency earnings platform where you can buy and earn passive income on your digital assets.

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