Mesopotamian Triangle: The Middle Eastern Crypto Race Has Started (Ep. II: Banking)
TechnologyBit News Today3 min read
The Middle Eastern crypto race is spreading into central banking, with Iran, Turkey and Saudi Arabia each pursuing their own path to adoption. While the United Arab Emirates is still the crypto leader in the region, its neighbours are increasingly looking to digital currencies as a way to strengthen their economies. ## Iran forges ahead with state-backed stablecoin
Last month, Iran's national postal service, in collaboration with several local startups, launched a new government-backed digital currency. Known as PayMon, the cryptocurrency intends to be pegged to the Iranian rial, and is being touted as a way for citizens to avoid US-led financial sanctions.
PayMon, which is issued by an Iranian subsidiary of Russia's Mir payment system, runs on a local blockchain and is reported to have the support of Iran's central bank. The launch comes as Iran has experienced a sharp drop in the value of its currency, due in part to the re-imposition of US-led sanctions.
PayMon will initially be used by the postal service for payments, but plans are in motion to roll out the currency to the public.
Across the Middle East, Turkey is reportedly planning to launch a sovereign cryptocurrency. The digital coin, which is designed to be a stablecoin pegged to the Turkish lira, is intended to combat several economic challenges facing the country, including a high inflation rate and foreign exchange volatility.
Opposition lawmakers in Turkey said that the Bank of Turkey has already started work on a sovereign cryptocurrency "without public disclosure". The Turkish government has yet to confirm these reports, nor are any concrete details of the cryptocurrency known at this time.
Nonetheless, Turkey is one of several nations around the world, such as Venezuela with the Petro, that are exploring the idea of launching a digital coin to help plug the gaps in their economy. ## Saudi Arabia mulls state-backed crypto, but adopts blockchain
While Saudi Arabia is rumoured to be considering a state-backed cryptocurrency of its own, it has firmer plans to implement blockchain technology. The Saudi Arabian Monetary Authority (SAMA) has revealed it is working on a new blockchain system for making cross-border payments.
SAMA did not elaborate on the technology it was using. However, it said the service would offer a "more efficient, secure and faster way to conduct cross-border payments and financial transactions" between Saudi Arabia and other countries. ## Cryptocurrencies face regulatory hurdles in the region
A number of countries in the Middle East have yet to establish regulatory frameworks around cryptocurrencies, and this uncertainty has led to some volatility in the market.
In September, the Saudi Arabian Monetary Authority (SAMA) and the Central Bank of the UAE issued a joint statement on cryptocurrencies, warning residents not to deal with them and to report any suspected illicit activities. The statement reads:
"We would like to reiterate that cryptocurrencies are not recognized in the UAE or Saudi Arabia as legal tender. At present, trading in this instrument is highly speculative and is not covered by any regulatory framework."
The UAE and Saudi Arabia are considering creating a central cryptocurrency and cryptocurrency regulations are also being drafted in Azerbaijan, Jordan, Kuwait, Oman, Qatar, Syria and Yemen - suggesting that a regional approach to crypto is still a long way off.
While many in the Middle East are increasingly optimistic about the potential uses of digital currencies in areas such as banking and energy trading, the path to widespread adoption is still fraught with regulatory challenges and economic uncertainty.
