Bitcoin Easily Used in Money Laundering, Funding Terror: UAE Central Bank Governor

The governor of the United Arab Emirates (UAE) central bank has criticized bitcoin by deeming it an unofficial currency lacking supervision. Mubarak Rashed Al Mansouri, governor of the Central Bank of the UAE was speaking to reporters on the sidelines of the Islamic Financial Services Board Summit in Abu Dhabi this week when he rebuked bitcoin. According to the Emirates News Agency, the official also said that no licenses had been issued to bitcoin startups or cryptocurrency companies to operate in the local region. The central banker reportedly stated: Some nations have announced that they are not using Bitcoin, and consequently, its value sharply plummeted. In addition, it can be easily used in money laundering and in funding terror activities. While the comments are notable for their harsh criticism of the world’s most prominent cryptocurrency, the UAE central bank contrarily confirmed that it wasn’t banning bitcoin or any cryptocurrency earlier this year. Advertisement: On January 1, the authority released a new regulatory framework[PDF] for payment systems, with a notable statement that read: “All virtual currencies (and any transactions thereof) are prohibited.” A month later, the central bank chief moved to confirm that virtual currencies would be exempt from the new regulation. “[T]hese regulations do not cover ‘virtual currency’, which is defined as any type of digital unit used as a medium of exchange, a unit of account, or a form of stored value, Al Mansouri said. “In this context, these regulations do not apply to bitcoin or other crypto-currencies, currency exchanges, or underlying technology such as Blockchain.” As such, it remains to be seen if the governor’s critical take on bitcoin impacts the nascent cryptocurrency industry locally. The UAE saw its first bitcoin exchange BitOasis launch in late 2016, headed by a female Jordanian entrepreneur in Dubai. The exchange, which also offers a bitcoin wallet available for users in the Middle East, North Africa and parts of Asia, gained seed funding earlier in 2016 ahead of its launch and continues its intent to be the first ‘digital assets’ company to be registered in the MENA (Middle East North Africa) region. Al Mansouri’s remarks on bitcoin, while predictable, contrast to those offered by his Singaporean counterpart earlier this week.  Monetary Authority of Singapore (MAS) managing director Ravi Menon said the central bank would keep “an open mind” with cryptocurrencies like bitcoin, adding that “the currency itself does not pose a risk that warrants regulation.” He added:  [I]t is a known fact that cryptocurrencies are quite often abused for illicit financing purposes, so we do want to have AML/CFT controls in place. So those requirements apply to the activity around cryptocurrency, rather than the cryptocurrency itself.