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, cryptocurrency 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.”
 Tim Fries, Qatar Bans All Cryptocurrency Activity, Security Tokens Still Allowed, (2020, January 7). The Tokenist. https://tokenist.com/qatar-bans-all-cryptocurrency-activity-security-tokens-still-allowed/  Dave Hamilton, Qatar Bans All Cryptocurrency in QFC. Securities, Securities.io. (2020, June 7), https://www.securities.io/qatar-bans-all-cryptocurrency-in-qfc/  Adrian Zmudzinski, Qatar Financial Centre Puts Blanket Ban on Cryptocurrency Businesses, Cointelegraph; Cointelegraph. (2020, January 6), https://cointelegraph.com/news/qatar-financial-centre-puts-blanket-ban-on-cryptocurrency-businesses  Yogita Khatri, Qatar bans crypto trading, confirms financial regulator, (2020, January 7). The Block. https://www.theblockcrypto.com/linked/52087/qatar-bans-crypto-trading-report