Currently, Qatar’s crypto regulation remains stringent, with a blanket ban on most cryptocurrency transactions. Exceptions are made for tokenized securities and other regulated financial instruments.
Qatar is advancing toward providing an extensive framework that would legally acknowledge cryptocurrencies. Recently, Henk Jan Hoogendoorn, Chief of the Financial Services Sector at the Qatar Financial Centre (QFC), said that the country has built a strong system for tokenizing a range of real-world assets. He expects that this framework will be finalized and enacted by the fourth quarter of this year.
Qatar started a public consultation last year to get views on proposals for including a cryptocurrency framework in the QFC. It sought feedback from industry professionals and businesses regarding its structure, content, and feasibility, with a submission deadline of January 2, 2024.
Notably, the framework aims to oversee investment tokens that represent underlying assets, which are already recognized products under current financial services regulations. The QFC Authority (QFCA) and QFC Regulatory Authority (QFCRA) are working together to develop this digital asset framework. Hoogendoorn explained that the regulation aims to reinforce Qatar’s efforts toward the digital economy and enhance the QFC’s reputation as a leading financial hub in the Middle East region.
Meanwhile, Qatar’s neighbor, Saudi Arabia, has legalized the cryptocurrency market, which is expected to grow at a rate of 7.49% from 2024 to 2028, according to various reports.
The QFC also recently established a Digital Assets Lab for companies and developers to create advanced crypto and blockchain solutions. “[Digital Assets Lab] resonates with the Qatar Fintech Strategy and Qatar Central Bank’s proactive approach to adopting innovative technologies,” said Hoogendoorn.
Qatar’s History of Restrictive Policies
Qatar has historically kept a wary and restrictive attitude toward cryptocurrencies. In January 2020, the QFC explicitly prohibited locals from using any kind of virtual assets, including cryptocurrencies. This ban encompassed crypto-to-crypto operations and the buying, storing, and selling of virtual assets not backed by the government.
This restrictive approach was largely driven by concerns over money laundering and terrorist financing, priorities that have shaped Qatar’s cautious policy towards cryptocurrencies. In 2023, the Financial Action Task Force (FATF) highlighted the need for more harsh action against businesses breaching the crypto ban.
Currently, Qatar’s crypto regulation remains stringent, with a blanket ban on most cryptocurrency transactions. Exceptions are made for tokenized securities and other regulated financial instruments.
Still, some sources suggest that the nation may have a gray market for cryptocurrency trading in spite of the ban. This could include over-the-counter (OTC) trading, peer-to-peer transactions, or the use of foreign-based exchanges by individuals and businesses.
In June, Qatar’s central bank completed the foundational work for its Central Bank Digital Currency (CBDC). The government is now poised to test this digital currency to facilitate large-scale payments. The project will involve partnerships with several banks to enhance the system’s capabilities.
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