- Fluctuations and significant price volatility typically characterize cryptocurrencies; as their global speculations are completely unregulated, a fact that makes investments in them quite risky and highly speculative
- The Bank has issued a fresh warning stating that the violators could face possible imprisonment for dishonouring the Bank’s directives
- Whoever violates this shall be imprisoned and fined no less than one million pounds and no more than LE10 million
The Central Bank of Egypt has yet again tightened its stand against cryptocurrency. The Bank has issued a fresh warning stating that the violators could face possible imprisonment for dishonouring the Bank’s directives.
“Fluctuations and significant price volatility typically characterize cryptocurrencies; as their global speculations are completely unregulated, a fact that makes investments in them quite risky and highly speculative, and are likely to lead to sudden losses of their whole value.” This is a statement that the CBE issued last year to restrict cryptocurrency, especially bitcoin, in the country.
This year, the Bank has reiterated that Egyptian Law prohibits issuance, trading, or promoting cryptocurrencies, creating, operating or promoting platforms for trading, or carrying out any crypto-related activities.
The CBE also stressed that the Bank or any other financial institution in the country does not issue or back any cryptocurrency.
Stipulations of the Law of the Central Bank of Egypt
The statement by the Bank further outlines that the Law of the Central Bank of Egypt and the Banking System, promulgated by Law No. 194 of 2020:
- Prohibits the issuance, trade or promotion of cryptocurrencies
- Creation or operation of platforms for trading it or carrying out related activities
“Whoever violates this shall face imprisonment and get a fine of no less than one million pounds and no more than LE10 million or one of these two penalties.”
However, Egypt has been fluctuating on their stand regarding crypto adoption in the country, with 2018 being the year the national government took a public stance on cryptocurrencies.
Egypt’s Islamic Law resists cryptocurrency
In 2018, Egypt’s primary Islamic legislator Dar al-Ifta issued a religious decree which stated bitcoin commercial transactions haram. This meant that they were prohibited under Islamic Law.
Dar al-Ifta stated that cryptocurrencies risked damaging Egypt’s national security and central financial systems. He added that cryptocurrency stood in a better position to fund terrorism activities.
It is important to note that the declaration of cryptocurrencies being haram is fatwā. This means that while the country’s religious decree is considered a legal opinion, it is non-binding.
Egypt’s Central Bank warning on cryptocurrency- 2018
After the stand taken by Islamic Law, the Central Bank of Egypt then issued a warning in January 2018 against trading cryptocurrencies, such as bitcoin, due to the extremely high risk associated with such currencies.
The Central Bank also asserted that commerce within the Arab Republic of Egypt confines only to the official paper currencies approved by the Bank.
Egypt revises its stand on cryptocurrency- 2019
A year later, after the CBE announced strict warnings on cryptocurrency, traders in the country received a positive for the first time. The Bank announced that it was working on a draft law that would only ban the creation, trading, or promotion of cryptocurrencies without a license. The statement revealed that the CBE was changing its outlook toward digital currencies and cryptocurrencies.
In 2020, the Egyptian Parliament enacted the Central Bank and Banking Sector Law No.194 of the year 2020. The Law introduced several technological and digital means to aid with the digital transformation of Egypt’s banking and financial sector. This included digital finance, digital settlement of cheques, e-Money, crypto, FinTech and RegTech. The CBE Law also sets forth definitions and licensing instructions regarding digital banks.
Despite Africa ranking as the fastest growing crypto market, large economies such as Egypt have shown signs of lacking trust in the development.
The latest issuance by the Central Bank of Egypt will slow down cryptocurrency adoption in Egypt and all the opportunities that come with it.