Middle Eastern Countries Begin to Accept the Idea of Cryptocurrency

June 28, 2021
Sarah Gormley

While cryptocurrency has been flourishing across the world, it has not been approved of in the Middle East until recently with Dubai’s first crypto listing — the Bitcoin Fund — and Israel’s test of a digital Shekel.

 

The Bitcoin Fund in Dubai

Last week, the Bitcoin Fund listed in Nasdaq Dubai became the first-ever listed cryptocurrency fund in the Middle East. The Bitcoin Fund was launched by one of Canada’s largest asset fund management companies, 3iQ. Under asset management, the company has around $1.5 billion with big plans to double this in the following year.

In an interview with Reuters, CEO of 3iQ, Frederick Pye, says that “With the listing of the Bitcoin Fund, it’s going to give people access in the region to this fund on the Dubai exchange in the hours that the Dubai exchange trades at.” The company hopes to increase the size of the Bitcoin Fund in Dubai, issuing shares based on the demand.

 

Israel’s Digital Shekel

Ever since 2017, the idea of a central-bank digital currency (CBDC) has been discussed, while no real action plan has ever been created.

In the conference of the Fair Value Forum of IDC Herzliya, Bank of Israel Deputy Governor Andrew Abir commented that the bank had already run a digital currency pilot, shocking many members of the panel. In response, Abir said that he was not confident that a CBDC would ever be put into play. “I had previously estimated that the chance of having a CBDC within five years is 20%,” he comments. “My estimate has increased a bit in the last year, mainly because other countries are advancing with it too. But still, there is less than a 50% chance.”

In May, the Bank of Israel began planning how it could implement a digital currency successfully. The digital shekel would have to rely on technologies like blockchain, while it would be very different from cryptocurrencies accepted by other countries, such as Bitcoin. The main difference is that a CBDC would be regulated by the state authorities since it is issued by the central bank, as opposed to cryptocurrencies that have no central bank.

Abir has made it clear that the digital currency would not be created to completely eliminate banks or be designed as a sort of protection against Bitcoin. He is persistent that it will be a payments system incomparable to Bitcoin. He says that “Bitcoin is not a payment system, and it is not a currency. In the best situation, it is a financial asset, and in the worst case, it is a pyramid scam,” leaving people curious as to if it would be successful. 

 

Other Countries’ Thoughts

Cryptocurrency projects have been discussed in many of the other Middle Eastern countries — some are enthusiastic about the opportunity and some not so much. The United Arab Emirates (UAE) is one of the countries that shows a great interest in incorporating cryptocurrency. The UAE recently launched a blockchain-enabled trade finance platform, known as UAE Trade Connect, to limit economic crimes in the area. The countries that are not big fans of investing fun cryptocurrency, such as Qatar, all seem to be hindered by the same thing: cryptocurrencies’ level of volatility.

 

It is easy to see that countries that have incorporated financial technology already are more revolutionized than those that have not. Will the countries that have do not use cryptocurrency be able to keep up with those that do?

 

References:

“Middle East Eyes for Strong Potential Cryptocurrency Market.” Blockchain News, 28 June 2021, blockchain.news/news/middle-east-eyes-for-strong-potential-cryptocurrency-market.

Saba, Yousef. “Bitcoin Fund Breaks New Ground in Middle East with Debut on Nasdaq Dubai.” Reuters, Thomson Reuters, 23 June 2021, www.reuters.com/world/middle-east/bitcoin-fund-makes-nasdaq-dubai-debut-first-middle-east-2021-06-23/.

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