UAE, Saudi Arabia agree plan for joint cryptocurrency

Executive Committee of the Saudi-Emirati Coordination Council agrees seven initiatives at its first meeting in Abu Dhabi

The central banks of the United Arab Emirates and the Kingdom of Saudi Arabia have concluded plans to develop a cross-border cryptocurrency. The central bank governor of UAE believes that this move will enhance development and efficiency amongst the two countries.

Currency for banks, not individuals

The report by local news outlets revealed that even though the exact date for the launch of the cryptocurrency is still unknown, the central banks have made it clear that the cross-border digital currency is designed for banks and not for individual customers, with banks in the countries allowed to make transactions using the cryptocurrency.

The central bank governor of the UAE, Mubarak Rashed Al Mansouri, commented on this latest development while speaking at the high-level meeting for the Arab region on global banking standards and regulatory and supervisory priorities. He stated that “This is probably the first time ever that witnesses the cooperation of monetary authorities from different countries on this topic and we hope that this achievement will foster similar collaboration in our region.”

First results of year-long partnership

Even though the announcement is just coming recently, reports of the partnership between the two authorities first came up last year. Back then, Al-Mansouri pointed out that the two governments are studying digital currencies.

He also noted that they are not done with the study as the two bodies are yet to put up the necessary framework to execute the project. The digital currency will be developed jointly by the Central Bank of the UAE and the Saudi Arabian Monetary Authority (Sama).

In a separate statement, Central Bank of UAE stated that: “CBUAE and Sama intend to execute a joint crypto-currency and Distributed Ledger Proof-of-Concept (PoC). The PoC’s design mainly focuses on the transfer of ownership of a central bank asset (crypto-currency) among participants.”

UAE warming up to crypto

Both Saudi Arabia and the UAE have yet to endorse any cryptocurrency due to their speculative nature and the risks involved in trading them. This even led to cryptocurrencies currently being banned in certain countries in the region. However, things are slowly changing as reports in October suggested that the UAE is planning to recognize ICOs as a means of funding for private companies in the country. Authorities in the country are putting together a regulatory framework for the industry and would be ready before the first half of 2019.

UAE securities market regulator chief Omar Saif al-Zaabi once stated that the board of the Emirates Securities & Commodities Authority [ESCA] has agreed to regard ICOs as securities.