From Qatar to Palestine: How Cryptocurrencies Are Regulated in the Middle East

On Sept. 4, the government of Bahrain, a constitutional monarchy in the Persian Gulf, emphasized the importance of blockchain for the country’s economy. While the kingdom seems to be taking a rather positive approach toward crypto, the Middle East at large has proven to be a difficult region for virtual currencies, as a large chunk of countries there have banned crypto trading. Nevertheless, the Middle East seems to be on its way to become the global blockchain powerhouse: From Dubai to Tel Aviv, the technology is being thoroughly researched and adopted.

The list below is based on thorough news research, but should in no way be considered complete. If you have more detailed information on banks and the crypto relationship in your country, we encourage you to share it in the comment section.



Bahrain is taking a rather positive approach toward crypto. In September 2017, the Bahrain Central Bank (BCB) announced the creation of a “Regulatory Sandbox.” Its aim is to facilitate the fintech industry in the country, including Bitcoin and blockchain-related businesses.

In June 2018, local media reported that Dubai-based Palmex digital currency exchange was granted an administrative sandbox license by BCB, allegedly becoming “the first and only cryptocurrency exchange in the Middle East and North Africa to receive a regulatory sandbox license.” A Bahrain government official was quoted as saying: “As of now, we recognize cryptocurrency as a commodity that can be traded in the exchanges. We are not considering it as a legal tender in any form.”


Until recently, the Bahrain government had not commented on the matter of blockchain per se, instead mentioning it in the broader context of the fintech industry. However, in September, Abdulhussain Mirza, Bahrain’s minister of electricity and water affairs, confirmed the government’s commitment to supporting the technology:

“Technologies such as blockchain take us a huge step forward in finding a secure way to facilitate transactions… Blockchain’s ability to protect user’s data is a true mark of progress, especially due to the fact that it can be applied in different companies from different industries including cyber security.”



Cryptocurrencies appear to be popular in Turkey: According to a recent ING Bank report, a whooping 18 percent of Turkish people own cryptocurrencies compared with the eight percent in the United States. That could be attributed to the rising inflation rate of Turkish lira — indeed, the BTC trade volume in Turkish lira reportedly rose from 327,295 to 759,026 between the week ending on July 7 and the one ending Aug. 11.

Following the Venezuelan experiment with Petro, the Turkish government has considered issuing its own state-backed cryptocurrency. In February 2018, Turkey’s Nationalist Movement Party (MHP) deputy chair Ahmet Kenan Tanrikulu revealed a plan to launch a “national Bitcoin” called the ‘Turkcoin,’ as per his 22-page report on regulating the crypto market. Similar plans were also voiced by Turkey’s Deputy Prime Minister Mehmet Simse in an interview with CNN Turk. In June, local media reported that ‘Turcoin,’ a separate project advertised by its creators as Turkey’s ‘national’ cryptocurrency, had been outed as a ponzi scheme.

Previously, in 2017, Turkish lawmakers opined that Bitcoin was “not compatible” with Islam due to the government being unable to control it. They argued that its “speculative” nature meant that trading it was inappropriate for Muslims, according to a local news outlet Enson Haber:

“Buying and selling virtual currencies is not compatible with religion at this time because of the fact that their valuation is open to speculation. They can be easily used in illegal activities like money laundering, and they are not under the state’s audit and surveillance”


Despite the unclear regulatory environment in regard to cryptocurrencies, Turkey has bolstered its underlying technology. In August, the Istanbul Blockchain and Innovation Center (BlockchainIST Center) was inaugurated at Bahçeşehir University (BAU). The country’s first university-level blockchain center aims to close the blockchain expertise gap and ensure wide deployment of the technology, as Daily Sabah reported.

According to the center’s director Bora Erdamar, it is set to be “the most important center of research and development and innovation in Turkey, in which scientific studies and publications are made in blockchain technologies.” He also expressed that Turkey could become the leading country in technology that will “transform humanity.”

Most recently, in September, Turkey’s Borsa Istanbul Stock Exchange (BIST) developed a blockchain-powered customer database, to manage the addition of new customers, documents and edit information.



Cryptocurrencies are banned in Qatar. In February 2018, the Qatar Central Bank (QCB) published a statement sent to all banks operating in the country, in which it warned the public that trading in Bitcoin is not allowed in the country. The watchdog added that penalties will be imposed on those who fail to comply.

Specifically, the QCB argued that Bitcoin was an illegal currency because “there is no commitment from any central bank or a government in the world to exchange their value for money issued and cleared for payment for the goods traded globally or for gold.” It also cited Bitcoin’s volatility as well as involvement in financial crimes and cyber attacks among other reasons.


Despite that the QCB has prohibited trading cryptocurrencies in the country, Qatar will host a blockchain conference in Doha. Moreover, there are a number of local blockchain-focused startups there: The country considered using the technology after a number of neighboring countries cut ties with it over Qatar’s alleged support of terrorism in 2017.

For instance, in January 2018, a local fintech company QPAY launched a blockchain-powered, e-commerce initiative based on Ethereum blockchain platform. Upon the launch, QPAY’s CEO Ben Aissa declared:

“As an active member of Qatar’s digital and cashless initiatives, and aligned with the National Vision 2030, we see blockchain as a key ingredient in taking leadership in Qatari digital revolution and financial services innovation.”

Saudi Arabia


Cryptocurrencies are deemed illegal inside the Kingdom of Saudi Arabia. On Aug. 8, the Saudi Arabian Monetary Authority (SAMA) officially warned citizens against trading virtual currencies, effectively outlawing them. The regulator’s statement read:

“The committee assured that virtual currency including, for example, but not limited to, the Bitcoins are illegal in the kingdom and no parties or individuals are licensed for such practices. The committee warns all citizens and residents about drifting after such illusion and get-rich scheme due to the high regulatory, security and market risks involved, not to mention signing of fictitious contracts and the transfer of funds to unknown recipients/entities/parties.”


Similarly to Qatar, the local ban on trading cryptocurrencies does not stop Saudi Arabia from experimenting with blockchain within its Saudi Vision 2030 program designed for long-term economic development.

For instance, in July, within that program, Riyadh Municipality chose IBM as its strategic partner. The IT giant will collaborate with Elm Company, the municipality’s technology partner, to put government services and transactions on the blockchain. Earlier in May, the Saudi Ministry of Communications and Information Technology teamed up with ConsenSys, a U.S.-based startup focused on building Ethereum-powered software products. Jointly, they hosted a three-day blockchain bootcamp.



Iran, pressed by economic sanctions imposed by U.S. President Donald Trump, is slowly turning to cryptocurrencies. Due to Visa and Mastercard not operating in the country, and the local currency — the rial — plummeting because of high inflation rates, Bitcoin has gained local popularity: In May, local media reported that over $2.5 billion had been sent out to purchase virtual currencies in Iran.

Currently, cryptocurrencies are outlawed in Iran. However, the situation might change by the end of September. In April, the Central Bank of Iran (CBI) proclaimed that virtual currencies are used for money laundering and supporting terrorism, and banned local citizens, banks and exchanges from trading them. However, in late August, Saeed Mahdiyoun, the deputy director in charge of drafting regulations for Iran’s Supreme Cyberspace Council, declared that the CBI is set to update its official stance on the issue at the end of September.

Similarly to Venezuela, Iran is also preparing grounds for a national cryptocurrency to dodge U.S. sanctions. In May, Mohammad-Reza Pour-Ebrahimi, the head of the Iranian Parliamentary Commission for Economic Affairs, reportedly met with Russian officials to discuss how crypto can help bypassing the international embargo. In July, Alireza Daliri, deputy for management and investment at the Directorate for Scientific and Technological Affairs, revealed that plans for the creation of a national virtual currency were being developed:

“We are trying to prepare the grounds to use a domestic digital currency in the country…
This currency would facilitate the transfer of money (to and from) anywhere in the world. Besides, it can help us at the time of sanctions.”

Additionally, in September, the Cyberspace Council’s secretary Abolhassan Firoozabadi stated that the mining of cryptocurrencies had been approved as an industry by government authorities, according to local media. However, a legal framework for the industry is yet to be introduced.


Iranian government seems to be bullish on crypto’s underlying technology. For instance, in August, Iran’s Information and Communications Technology (ICT) ministry and the National Library signed a memorandum of understanding (MOU) to use blockchain to digitize the country’s archives.

Arame Bandari, a researcher at Iran Blockchain Labs, has previously told Cointelegraph that there is a established startup ecosystem in Tehran, Isfahan and Shiraz. Moreover, he mentioned that technology parks, incubators, crowdfunding platforms and business accelerators are being set up, “paving the way for the implementation of a technology/knowledge-based economy.”



Bitcoin is prohibited in Iraq. In December 2017, the Central Bank of Iraq’s (CBI) information director Aysar Jabbar, reportedly stated that “this currency [Bitcoin] involves several risks that may result from circulation, especially with regard to electronic piracy and fraud, although there is no popularity within Iraq.”

According to a local economic expert, those found using cryptocurrencies may be prosecuted under pre-existing Anti-Money Laundering (AML) laws.



Virtual currencies, including Bitcoin, are banned in Kuwait. In December 2017, Kuwait’s Ministry of Finance declared that it does not recognize cryptocurrencies, and that financial institutions, banks and companies are prohibited from dealing with them.

However, sources from the Ministry of Finance cited by Arab Times disclosed that neither their institution nor the central bank can regulate Bitcoin trading because it is “out of [their] control.” Additionally, they stated: “…the proceeds of Bitcoin that are wired from abroad to Kuwait are considered as illegal and unclean money, because the Kuwaiti law does not consider those currencies.”


In May, the Kuwait Finance House (KFH) joined RippleNet, a major blockchain-powered network designed for cross-border remittance payments. In an accompanying statement, KFH expressed its intention to use Ripple’s “unique tool” for its retail customers:

“With this, KFH can provide instant and secure cross-border money transfers within seconds, with end-to-end visibility over the journey of the payment.”

United Arab Emirates


The United Arab Emirates (UAE) government have been sending mixed signals regarding cryptocurrencies: In early October 2017, the state released its first regulatory guidelines for ICOs and virtual currencies, where they have been recognized as securities and commodities respectively.

However, few weeks later, Central Bank Governor Mubarak Rashid al-Mansouri issued a public warning against the use of virtual currencies as a medium of exchange, citing money laundering and funding terrorism among the reasons. Further, in February, the UAE Securities and Commodities Authority (SCA) additionally warned investors about the risks of ICOs.


The UAE has been experimenting heavily with blockchain. Back in October 2016, Dubai launched a city-wide Blockchain Strategy with the aim of becoming the first blockchain-powered city by 2020.

In April 2018, the prime minister of the UAE and ruler of Dubai revealed the nation’s Blockchain Strategy 2021, with similarly ambitious plans to become the world’s first blockchain-powered government. The new scheme will reportedly focus on citizen and resident happiness, government efficiency, legislation and global entrepreneurship.

More specifically, the strategy aims to have 50 percent of federal transactions being conducted on blockchain by 2021. That transitions implies moving to paperless documentation of visa applications, bill payments and license renewals with the technology, which could potentially save $11 billion annually.

In May 2018, the UAE government announced a partnership with IBM to create a blockchain business registry to ensure businesses operate under its jurisdiction. The initiative will “streamline the process of setting up and operating a business, roll out digital exchange of trade licenses and related documentation for all business activities, and ensure regulatory compliance across Dubai’s business ecosystem,” as per its press release.



In January 2018, Egypt’s Grand Mufti Shawki Allam famously claimed that Bitcoin is forbidden under Sharia law. He issued a fatwa arguing that crypto trading leads its users to “fraud, betrayal and ignorance.”

Egypt’s government does not support the use of cryptocurrencies either, although it hasn’t outlawed them. For instance, in December 2017 Egypt’s Financial Regulatory Authority (FRA) stated that urging investors into dealing with cryptocurrencies is considered a “form of deception that falls under legal liability,” while the Central Bank of Egypt has reportedly announced that it does not recognize cryptocurrencies and warned the public from trading them.


In April 2018, Egypt’s first blockchain-focused incubator called NU TechSpace was opened. It has reportedly teamed up with IBM, Novelari, and zk Capital to stimulate blockchain-backed business models. The incubator is also allegedly supported by the state-owned Academy of Scientific Research and Nilepreneurs and aims to help the government gain a better understanding of blockchain.



Cryptocurrencies seem to be in a grey regulatory zone in Cyprus, as no definite regulatory frameworks have been introduced by the local government. Back in 2014, the Central Bank of Cyprus representative was quoted by the Cyprus Mail as saying: “Bitcoin is not illegal, but at the same time, neither is it subject to control or regulation.” Since then, the watchdog has not issued any major updates on the issue.

Nevertheless, in July 2018, Bitcoin Cash (BCH) advocate Roger Ver claimed he met with nation’s president, Nicos Anastasiades, to discuss benefits of the cryptocurrency and merchant adoption across the island. That implies that Cyprus might become more crypto-friendly in the future.


In June, Ripple announced the University Blockchain Research Initiative and donated around $50 million to universities across the planet, including Cyprus’ University of Nicosia (UoN). UoN claims to be the first accredited university in the world to accept Bitcoin payments. It has also launched a Master of Science degree in Digital Currency aimed “to fill an important gap that exists today between the supply of and demand for academic knowledge in the area of digital currency.”

Moreover, Cyprus is home to the Cyprus Blockchain Technologies Ltd., a nonprofit organization founded as a collaboration among academic institutions, including Cyprus International Institute of Management (CIIM), University College London Centre for Blockchain Technologies (UCL CBT) and UoN, local regulators, financial institutions and banks — including Hellenic Bank, Bank of Cyprus and Cooperative Bank.



Israel is in the process of defining its approach toward cryptocurrencies. In January 2018, Deputy Governor Nadine Baudot-Trajtenberg announced that Bank of Israel would not recognize virtual currencies as actual currency.

Moreover, in March, Israel Securities Authority (ISA) Committee for the Examination and Regulation of ICOs published a report “designed to dispel uncertainty and strike a balance between technological innovation and the protection of the investors,” where it essentially argued that virtual currencies such as BTC are considered securities.

Similarly, the Israel Tax Authority (ITA) stated that cryptocurrencies will be taxed by the capital gains as properties instead of currencies.


Cointelegraph has previously covered Israel’s vast blockchain scene in depth: Selva Ozelli, an international tax attorney and CPA, reviewed local blockchain initiatives, including the following: CoaIiChain, an interactive political platform that promotes the policies of an open government and eliminates the communication gap between the elector and the elected; a blockchain drone registry; and a national cryptocurrency.

Additionally, in July, Israeli news outlet The Jerusalem Post reported that Czech investment banking firm Benson Oak had plans to pump “around $100 million” into Israel-based startups with an “emphasis” on blockchain, boosting the local scene.



Bitcoin trading is banned in Jordan, as in 2014 the Central Bank of Jordan’s (CBJ) warned locals that virtual currencies are not legal tender “and there is no obligation on any central bank in the world or any government to exchange its value for real money issued by them nor backed by underlying international commodities or gold.”

Additionally, CBJ’s representative told The Jordan Times that the nation’s banks, financial institutions and exchanges had also received a circular “prohibiting them from dealing with virtual currencies, particularly in Bitcoins.”


Jordan is home to a refugee camp that runs on blockchain, with the help of a program called Building Blocks. Founded in early 2017, it helps the World Food Programme (WFP) to distribute cash-for-food aid to over 100,000 Syrian refugees in the country. As MIT Technology reports, if the project succeeds, it could advance the adoption of blockchain at sister U.N. agencies and beyond.



It seems that cryptocurrencies are neither banned nor allowed in Oman. In December 2017, the Central Bank of Oman (CBO) board cautioned the public that they are not responsible for any losses experienced from cryptocurrency investments and reminded that there are no policies or guidelines to regulate the industry in the country.


Oman has been actively showing interest in blockchain. For instance, in May, a government-owned entity called Blockchain Solutions and Services Co. (BSS) was announced. According to its website (unavailable by the press time), BSS is working with the Oman Banks Association, state bodies and local businesses to develop a framework for the nation’s digital advancement.

Moreover, the country’s BankDhofar has joined BankChain, an international banking community focused on the research and development of blockchain solutions.



In May 2017, the head of the Palestine Monetary Authority (PMA), Azzam Shawwa, told Reuters that they were planning to launch the country’s own virtual currency called “Palestinian pound” within five years.

The initiative was reportedly designed to shield Palestine against potential Israeli intrusion, as the country does not currently have a stable currency — relying on the euro, U.S. dollar, Israeli shekel and Jordanian dinar.

According to the 1994 Paris Protocol agreement, the PMA serves as a central bank, but does not have the ability to issue currency. The document also recommended the use of the shekel and gave Israel an effective veto over a Palestinian currency, as Shawwa explained:

“If we print currency, to get it into the country you would always need clearance from the Israelis and that could be an obstacle. So that is why we don’t want to go into it.”



In December 2013, Lebanon became the Middle East’s first country to issue a public warning regarding cryptocurrency trading, citing volatility, AML and KYC concerns among primary factors.

In October 2017, Lebanese central bank Banque du Liban (BDL) Governor Riad Salameh reiterated that position by claiming that BTC and other virtual currencies are “unregulated” commodities whose use should be prohibited. Additionally, he said that cryptocurrencies are feeble as national currencies because they are just “commodities.”


There is scarce information on existing blockchain infrastructure in Lebanon. However, in September, U.S.-based blockchain startup ConsenSys announced that it would host a five-day blockchain event there starting on Oct. 17.

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