Egyptian Central Bank Introduces Legislation to Replace Ban and Require Licensing of Cryptocurrency Enterprises

The Central Bank of Egypt (CBE) has drafted a bill to allow its Board of Directors to create rules that would require all individuals, companies and/or platforms dealing in or issuing cryptocurrencies to be licensed, The Egyptian Independent reports.

The rules would supplant a “fatwa” or ban on cryptocurrencies issued by Egypt’s Grand Mufti Shawki Allam in late December 2017, just after the price of one Bitcoin briefly soared to $20 000 USD.

According to Egyptian news outlet Ahram, at the time he issued the fatwa, Grand Mufti Allam said that, under Islamic law, “virtual currency” is not considered an “acceptable interface of exchange.”

Russian state media outlet RT also reported on the fatwa at the time, stating that Allam compared Bitcoin speculation to gambling, which is banned in Islam, “…due to its direct responsibility in financial ruin for individuals.”

Allam also reportedly stressed that, “(digital) currency’s risk, as well as its high-profit potential, undermines Egypt’s ability to maintain and stabilise its own currency…(and could) ease in money laundering and contrabands trade.”

According to the Egyptian Independent paraphrasing a source, the CBE’s proposal is designed to help Egypt better align itself with advances in digital banking:

“…(T)he new draft law (from the Central Bank of Egypt) has allocated great importance to financial technology, keeping pace with major developments in the banking industry in the world and enhancing the use of modern technology in the provision of financial and banking services.”

The source also claimed, according to a paraphrase, that:

“…(T)he new law provides legal authority for the electronic authentication of bank transactions, electronic payment orders, and transfer orders as well as for the electronic settlement of checks and the issuance and circulation of electronic checks and electronic discount orders, provided that Board of Directors of CBE issue rules and procedures regulating all the aforementioned actions (emphasis added).”

The same source also seemed to be referring to the purported “immutability” of blockchain or DLT records when he or she stated that records stored on cryptocurrency-style systems would have the same validity as paper records, provided they the blockchain records meet certain standards.

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