Qatar Cryptocurrency Laws Regulation of Digital Currencies: Cryptocurrency, Bitcoins, Blockchain Technology
On December 26th, 2020, the Qatar Financial Centre Regulatory Authority (QFCRA) declared that all virtual asset services are banned in the Qatar Financial Centre (QFC) except for digital asset services concerning token securities. The QFC is a special jurisdiction within the country with its own legal, business, tax, and regulatory infrastructure. The QFC’s purpose is to attract businesses and promote financial growth in the country. Companies in the QFC receive exclusive benefits, including fewer regulations and taxes. The QFC has attracted over 500 firms with over $20 billion in assets to their jurisdiction.
The ban defines virtual asset services to include “the exchange or transfer of virtual assets, or the exchange between virtual assets and fiat currencies.” Specifically, the regulator stated that the ban also includes “anything of value that acts as a substitute for currency, that can be digitally traded or transferred and can be used for payment or investment purposes.” Consequently, an exchange service facilitating cryptocurrency transactions are illegal in the QFC.
Exemptions to the ban include security tokens and other financial instruments regulated by the QFCRA, the Qatar Central Bank, or the Qatar Financial Markets Authority. These are exempt because these tokens are subject to full AML and KYC verification. In contrast, cryptocurrencies not regulated by a governmental agency within Qatar are banned because they are not subject to AML and KYL verifications.
The QFC ban is designed to prevent the use of cryptocurrency for financing terrorism and money laundering. The governor of Qatar’s Central Bank stated this task could only be achieved through a more strict and effective regulatory and legislative framework. The QFC ban is designed to prevent the use of cryptocurrency for financing terrorism and money laundering. The governor of Qatar’s Central Bank stated this task could only be achieved through a more strict and effective regulatory and legislative framework.
Like the QFCRA, Qatar’s central bank announced that it is illegal to trade bitcoin in the country of Qatar. The rationale for banning bitcoin is because the coin “is highly volatile and can be used for financial crimes and electronic hacking as well as risk loss of value because there are no guarantors or assets.”
P.S. Insights on Cryptocurrency Legal Issues
Most jurisdictions and authorities have yet to enact laws governing cryptocurrencies, meaning that, for most countries, the legality of crypto mining remains unclear.
Under the Financial Crimes Enforcement Network (FinCEN), crypto miners are considered money transmitters, so they may be subject to the laws that govern that activity. In Israel, for instance, crypto mining is treated as a business and is subject to corporate income tax. In India and elsewhere, regulatory uncertainty persists, although Canada and the United States are relatively friendly to crypto mining.
However, apart from jurisdictions that have specifically banned cryptocurrency-related activities, very few countries prohibit crypto mining.
Our Freeman Law Cryptocurrency Law Resource page provides a summary of the legal status of cryptocurrency for each country across the globe with statutory or regulatory provisions governing cryptocurrency. The globe below provides links to country-by-country summaries:
