Business 22 January 2019Paul How
Saudi-UAE council explores blockchain
The executive committee of the Saudi-Emirati Coordination Council, during its first meeting, announced seven initiatives, including the development of a cryptocurrency.
Emirates News Agency announced the launch of the Saudi-Emirati Pilot cryptocurrency, to be used by banks of both countries in order to better understand the technology and explore its application for cross-border payments.
The cryptocurrency will serve as a database accessible by both countries’ central banks and select banks participating in the project. It is intended to protect consumers, guide the creation of standards, as well as evaluate the risks that come with the technology.
Furthermore, the council will also observe the effect of the cryptocurrency on monetary policies.
Also mentioned among the initiatives is the facilitating of the flow of traffic at entry ports, to help smooth operations between Customs offices and commercial establishments, and improve trade between Saudi Arabia and the United Arab Emirates (UAE). No mention of blockchain for this is explicitly given, although companies elsewhere have shown the potential of distributed ledgers in making for more efficient transactions among different entities involved in trade.
Other initiatives listed are an SME joint platform, promotion of financial awareness of children, testing the supply chain security system, enhancing the travel experience of people with special needs, and a common market for civil aviation.
The council’s executive committee is headed by both UAE Minister of Cabinet Affairs and The Future Mohammad bin Abdullah Al Gergawi, and Saudi Minister of Economy and Planning Mohammed bin Mazyad Altwaijri.
Combined, Saudi Arabia and the UAE are second in the world in terms of sovereign wealth funds, and the eighth largest exporter of goods and services. Market capitalization of companies publicly listed in the countries is the 17th largest in the world. In addition, the nations’ oil reserves make up 24.3% of global stock.
Saudi Arabia is a member of the G20, which last December committed to adopt cryptocurrency regulations in line with Financial Action Task Force (FATF) standards.
Just last August, the Saudi Arabian Monetary Authority declared cryptocurrencies illegal, due to their perceived riskiness.
Last November, Crypto Bulls became the first UAE-registered cryptocurrency exchange. The country has also targeted for half of government transactions to be recorded on the blockchain by 2021.
The UAE’s Securities and Commodities Authority has approved the regulation of ICOs, which according to the agency are to be classified as securities.
Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as BTC coins; tokens on the Bitcoin Cash ABC chain are referenced as BCH, BCH-ABC or BAB coins.
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