The Qatar Financial Center, located in the capital Doha, has banned all ‘virtual asset services’, with a virtual asset being defined as anything that can act as a substitute for currency, can be digitally traded or transferred, and can be used for payments or investments. Essentially, cryptocurrency businesses are now banned in the Qatar Financial Center.
The Qatar Financial Center has its own legal and tax structure independent from the rest of Qatar and was designed to attract businesses with more favorable regulatory conditions. Indeed, the Qatar Financial Center has so far attracted 500 businesses with $20 billion in assets.
This favorable regulatory environment undoubtedly attracted crypto-related businesses, but now that is overdue to this ban.
The crypto business ban at the Qatar Financial Center is simultaneous with the passing of new anti-money laundering and counter-terrorist financing laws in Qatar. Therefore, it seems cryptocurrency is being banned under the pretense of protecting the country from terrorism.
Indeed, banning cryptocurrency under the pretense of stopping crime or terrorism has been a common theme globally, but the reality may be that governments are banning crypto so it does not compete with their respective fiat currencies.
Qatar’s native fiat currency is the Qatari Riyal, which has a fixed exchange rate of approximately USD 0.275. However, other countries with fixed exchange rates in the region, like Iran and Lebanon, have recently seen their currency pegs collapse on the free market.
There is no sign that the Qatari Riyal’s peg is collapsing at this time, but this action to ban crypto may be a pre-emptive move to ensure fiat stability considering the geopolitical instability in the region. Qatar depends on oil revenue, and its ability to export oil could be cut off if the Strait of Hormuz is closed due to a war between the United States and Iran.