February 8, 2018 / 12:06 PM / 8 months ago

UPDATE 1-Qatar central bank warns against trading in bitcoin

(Adds context)

By Hadeel Al Sayegh

DOHA, Feb 8 (Reuters) - Qatar’s central bank has warned financial institutions in the country not to trade in bitcoin or other cryptocurrencies, according to financial sources and a circular seen by Reuters.

Bitcoin and other virtual currencies have come under increasing global regulatory scrutiny amid wild swings in prices for the emerging asset class. Having peaked at almost $20,000 in December, Bitcoin was trading at about $8,550 on Thursday.

The letter sent to financial institutions by the Qatar central bank said it “politely requested banks and exchange houses in the country not to deal in any way with this currency, or exchange it with another currency, or open accounts to deal with it, or send or receive any money transfers for the purpose of buying or selling this currency”.

The central bank added that failure to comply with its request could result in penalties under existing legislation.

Commercial bankers in Qatar told Reuters that banks in the tiny but super-rich country, the world’s top exporter of liquefied natural gas, were already avoiding involvement with bitcoin.

However, Internet postings suggest that some Qatar residents have been buying bitcoin through online exchanges or exploring the possibility of investing in the virtual currency.

Qatar’s move appeared to be the strongest action taken so far among the wealthy Gulf oil-exporting countries to curb trade in bitcoin. But several other regulators in the region have expressed concern about cryptocurrencies.

Last July the Saudi Arabian central bank advised people not to trade bitcoin because it was outside the bank’s regulatory reach, though it did not impose an outright ban.

In October the United Arab Emirates central bank said it did not recognise bitcoin as an official currency, and this week the UAE’s securities regulator warned the public about the risks of using digital tokens. Oman’s central bank has issued a similar warning, local media has reported.

In December the UAE’s central bank said it was working with its Saudi Arabian counterpart to issue a digital currency based on blockchain technology that would be accepted in cross-border transactions between the two countries. It said the currency would be used among banks to make their transactions more efficient, not by individual consumers. (Writing by Andrew Torchia; Editing by David Goodman)

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