P Xenos and M Bacina
Qatar quashes all crypto activity, while security tokens survive
The Qatar Financial Centre Regulatory Authority (QFCRA) has reportedly announced that all services involving cryptocurrencies have been banned throughout the Qatar Financial Centre (QFC), until further notice.
The QFC has its own special jurisdiction within Qatar, operating in its own legal, business, tax, and regulatory infrastructure. It was specifically designed to attract businesses and facilitate economic development throughout the country. However, as noted via a tweet from the QFCRA, penalties will now be imposed on firms that provide virtual asset services within the financial centre.
The QFCRA stated that, "Virtual Asset Services may not be conducted in or from the QFC at this time." The QFCRA defines "virtual asset services" in quite broad terms, including crypto to fiat exchanges, crypto to crypto trades, and even services that facilitate the trading, custody, and issuance of virtual assets.
Notably however, security tokens and other financial instruments regulated by the QFCRA, the Qatar Central Bank, or the Qatar Financial Markets Authority, were not included in the ban.
With the ban, Qatar becomes the latest in a string of countries that have put brakes on the promotion of financial services tied to cryptocurrencies. India banned financial institutions from providing services to digital currency businesses, and China has banned the operation of domestic exchanges through its crypto crack down of last year.
Nonetheless, Qatar has been vocal about developing a FinTech strategy that would bring digital efforts and innovation to financial services. The QFCRA said in September of 2019 that:
Under new rules and guidance, the activity of non-regulated Professional Services firms has been widened to FinTech Services Providers which includes; providing cybersecurity solutions, application programming interfaces (API), cloud computing, developing blockchain-based technologies, artificial intelligence (AI) and companies which provide a platform for facilitating real-time transaction capability of internet connected devices
In other words, and as is being seen around the world, blockchain is being separated from crypto in the regulatory approach. It should be noted, however, that the “virtual asset” definition offered up by Qatar details the all-digital trading “excluding fiat currencies or other monetary instruments,” which leads to an open door for an examination of a central bank digital currency.