UAE and Saudi Arabia use cryptocurrency for cross-border payments.

[Paha87]

The UAE and Saudi Arabia - two countries with the world's second largest combined sovereign capital funds - have started testing their experimental cryptocurrency. According to the official news Agency Emirates News Agency, the cryptocurrency Saudi-Emirati is one of seven initiatives to be implemented in both countries.

Saudi Arabian cryptocurrency available only to banks

Formed in 2016, the Executive Committee of the Saudi-Emirati coordination Council held its first meeting in the UAE on January 19. The Board announced that the new cryptocurrency will be used for cross-border payments between Central and local banks.

It is expected that the cryptocurrency experiment is carried out to form a full understanding of the blockchain technology and ensure uninterrupted transactions in the two countries. Cryptocurrency testing involves payment flows between two neighboring countries in the middle East. Excerpt from the announcement separately describes:

Virtual currency is based on the use of a distributed database between Central banks and participating banks on both sides. We seek to protect the interests of customers, to establish technological standards and to assess the risks of cybersecurity. The project will also determine the impact of the Central currency on monetary policy.

As the CCN reported last year, the financial institutions of both countries carefully examined the new technology before implementing this initiative.

UAE - practise to blockchain and crypto?

In December 2018, the UAE securities and commodities Authority recognized ICO tokens as securities. It was also announced that they are working on a regulatory framework that will be released in mid-2019. The UAE authorities are cautiously following the path of cryptocurrency adoption, but continue to actively encourage the development of blockchain in the country.

In 2016, Sheikh Hamdan bin Mohammed bin Rashid al Maktoum, crown Prince of Dubai, launched a blockchain strategy that involves moving all government documentation to the blockchain by 2020.

Emirates Islamic Bank UAE also tested the technology of the blockchain, by sending checks to the blockchain in 2017. After the pilot project proved successful, its parent Bank Emirates NBD launched this initiative last year and registered one million checks in the first month alone. In November 2018 Hilal Bank in UAE has become the first Shariah Bank using the technology of the blockchain for the transaction of sukuk (bonds conforming to the Shariah).

Some of the leading blockchain and cryptocurrency companies have already started to seek to expand their services in the UAE. The country has already welcomed the opening of a branch of crypto-exchange Huobi and plans to launch a cross-border payment service in partnership with RippleNet in 2019.

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