07/09/2022
REASONS FOR WHY CRPTO HAS NOT TAKEN OFF IN THE MIDDLE EAST
Due to its relatively conservative society and stringent government regulations, the middle east continues to be one of the regions that have slowed the rapid expansion of cryptocurrencies that have swept across the global financial system. Since the increase in terrorist activity in the Middle East, the financial market there has been constantly watched. It makes sense that the government would need to keep an eye on the flow of funds as funding is essential to such nefarious actions. Governments in the area are understandably sceptical of cryptocurrency because it is not often particularly easy to monitor.
By outright banning cryptocurrencies and enacting penalties for defaulters, several states in the area have taken the subject more seriously than they would have otherwise. Even in countries experiencing high inflation, like Turkey, where the currency has been declining in value relative to the dollar while experiencing the worst inflation in Europe, this has not deterred people from utilizing cryptocurrencies. Despite the bans, one out of every five Turks now uses or has previously used cryptocurrency. Geo-blocking is used by the Iranian government to limit access, but people discover methods to get around it by using cryptocurrencies to deal with the country's soaring inflation.
After remaining mute on the subject for years, the UAE finally established a framework to address the crypto issue. This move implies good news for crypto enthusiasts in the middle east as it is generally known that the UAE is one of the least conservative states in the middle east with a progressive economic drive to attract foreign investors. Dubai is one of the leading business cities in the world, and a crypto-friendly policy would mean well for crypto enthusiasts in the region.
Even if the majority of countries in the Middle East do not outright forbid the usage or trading of cryptocurrencies, they also do not make it simple by impeding the trade with specific rules. UAE residents are permitted to buy and sell digital currency, but the government forbids banks from being engaged in any way. Syria's government monitors trade and demands tax payments from merchants, but it has not yet recognized it as legal cash.
The same principles apply with minor differences in Georgia, Israel, and Yemen depending on the degree of opposition to the administration.
Due to its nature, crypto is prone to be utilized for nefarious activities that the government cannot control or monitor. Security reports have revealed that terrorist networks used cryptocurrencies to fund their operations, making it more difficult for the government to monitor and control. It has been feared that more terrorist organizations are adopting cryptocurrencies to carry out terrorist actions after Mohammed Reza, the head of Iran's economic commission, revealed that over 2.5 billion dollars have left the nation through it without any clear indication of the reason.
Some terrorist fronts have been able to create untraceable financial systems using bitcoin after governments in the middle east and the west cracked down on the funding of terrorist organizations.
HAMAS, a group classified as a terrorist organization, created a website in 2019 where they urged supporters to contribute bitcoin to a crypto address that was challenging for the authorities to trace and censor. Because it permits money transfers without a central authority to impose restrictions on the account if it is flagged by security authorities, cryptocurrencies are appealing to terrorists in the Middle East. Governments are leery of anything that might be used to arm individuals who might try to undermine peace due to the current security situation in the Middle East.
While the rest of the globe has welcomed cryptocurrencies as a form of transaction, the primarily traditional middle eastern society has been sceptical. The usage of cryptocurrencies by citizens has been restricted and limited by countries in this region using a variety of techniques. The usage of cryptocurrencies was outlawed in Kuwait and Qatar because of the countries' outspoken mistrust of cryptocurrencies. The only way for residents in these nations to transact in cryptocurrencies is covertly, to avoid drawing the attention of security agents.
However, despite these drawbacks and potential threats, cryptocurrency is still a reality.
Any government that wants to participate in the economic market of the future, which is already here, cannot afford to fully isolate itself given the promising future of digital money. By establishing a centralized framework to regulate the use of cryptocurrencies with full government involvement, nations like Bahrain have advanced others in the region.
Given its economic dominance in the region and the determination of its government to continue expanding its economy, it is not surprising that the UAE has followed closely. Not banning or hindering the usage of cryptocurrency is the best approach for the government to have a handle on the problem.
