Blockchain Legislations in the Middle East: Blockchain regulations you should know about
Since Bitcoin was launched in 2009, the popularity of blockchain technology has increased. Many sectors and industries have adopted blockchain technology. The adoption rate is set to get even bigger.
However, this recognition has attracted the attention of many national governments. These governments seek to protect their citizens and profit from blockchain’s popularity.
Like other parts of the world, this situation has given rise to the launch of blockchain regulations in some Middle Eastern countries. First, however, it is important to identify why blockchain legislation is needed before exploring these regulations.
Why Should Blockchain Be Regulated?
The underlying technology of the blockchain is unique. It allows users to remain anonymous while trading with cryptocurrencies hosted on the network. However, there are possibilities that criminals will take advantage of blockchain systems to carry out financial crimes. As a result, many governments see the need to regulate blockchain platforms. They attempt to enforce security measures to prevent money laundering activities.
Blockchain Regulation in Middle Eastern Countries
The regulation of blockchain in the Middle East is mixed. Some countries have taken a hostile approach towards blockchain by banning the use of cryptocurrencies. However, in other countries, the use of blockchain technology has been widely encouraged with laws passed by the government. Regardless, Middle Eastern countries with blockchain legislation are:
- Cyprus: In February 2021, Cyprus amended its Prevention and Suppression of Money Laundering and Terrorist Financing Law. This law defines cryptocurrency assets. It further clarifies that blockchain-backed cryptocurrencies are neither guaranteed by the Central Bank. Similarly, do they have a legal status of a currency. This regulation implies that profits obtained from cryptocurrency assets are free from tax.
- United Arab Emirates (UAE): In 2020, the United Arab Emirates released a cryptocurrency regulation through its Securities and Commodities Authority. The regulation is tagged “The Authority’s Chairman of the Board Decision Concerning the Regulation of Crypto Assets’. It clarifies issues like the licensing process for crowdfunding crypto platforms and the development of crypto exchanges. It also provides that no cryptocurrency exchange is allowed to provide crypto-related services on specific crypto assets. The exception is if the Authority approves such assets. The Authority decides whether to approve a crypto asset. This is achieved by considering issues such as the kind of project that hosts the asset. Similarly, it assesses the security measures adopted by the project.
- Bahrain: In 2019, Bahrain became one of the first Middle Eastern countries to pass a law on blockchain technology and cryptocurrencies. The Central Bank of Bahrain (CBB) reported this new law. It is tagged the CBB Asset Rules. It regulates the activities of crypto asset providers in Bahrain and provides clarification on issues like security protocols, licensing, and governance.
While there is no doubt that blockchain legislations are necessary, Middle Eastern countries need to note that such legislation should be directed at preserving the technology’s features. This would ensure that the government only plays a role in improving the prospects of blockchain technology instead of stifling it.