Qatar Central Bank warning – Virtual Asset / Exchange

Introduction

The Qatar Central Bank (the “QCB”) has issued a general warning published on its website regarding trading of, or dealing in, virtual assets and currencies or tools that control them. The warning has been issued in response to news published on social media regarding offering of unlicensed financial services in Qatar by unlicensed financial institutions, in particular in respect of virtual assets trading platform. The QCB has previously issued two circulars (discussed below) setting out its stance relating to virtual assets and services in Qatar

Summary

The warning issued by the QCB is in line with, and reiterates, its decisions issued under Circular No. 6 of 2018 relating to trading in bitcoins (“QCB 2018 Circular”) and Circular No. 46 of 2019 relating to Virtual Assets and Virtual Assets Service Providers (“QCB 2019 Circular”). Under the QCB 2018 Circular and QCB 2019 Circular, the QCB declared that:

1. trading in bitcoins as illegal;
2. no license shall be granted to provide Virtual Assets Services as a commercial business;
3. no financial institution in Qatar should deal in any service related to Virtual Assets on the basis of ownership;
4. no financial intuition should allow any person to use its accounts or services to deal in Virtual Assets; and
5. no financial institution should send or receive money orders for the purposes of purchasing, selling, or dealing in Virtual Assets, whether such Virtual Assets are currently known and can be issued in the future.

The QCB considers these are not issued against liability from a central bank or a government for exchange of its value in return of issued currency, or clearing liability, or global commodity, or gold and involves high risks such as major value fluctuation (volatility), risk of being used in financial crimes or cybercrimes.

According to the QCB 2019 Circular, a “Virtual Asset” includes anything of value that acts as a substitute for currency, that can be digitally traded or transferred and can be used for payment or investment purposes, excluding fiat currencies and other monetary instruments. Additionally, “Virtual Asset Services” includes one or more of the following activities or operations:

1. exchange between Virtual Assets and fiat currencies;
2. exchange between one or more forms of Virtual Assets;
3. transferring, trading or dealing in Virtual Assets as a commercial business;
4. safekeeping and/or administration of Virtual Assets or instruments enabling control over Virtual Assets; and
5. participation in and provision of financial services related to an issuer’s offer and/or sale of a Virtual Asset.

In its warning, the QCB has stated that it will take legal acting against any provider of virtual assets and services without obtaining a license.

How can we help?

The Banking & Finance team at Al Tamimi & Company, Qatar is well placed to advise clients on the QCB laws and regulations and the offering of financial services and activities in Qatar.

If you require further information or advice, please feel free to contact us.