Cryptocurrencies may have taken a few knocks in value in recent months, but they are still very much at the forefront of investors’ minds around the world. In fact, bitcoin trading has been brisk and there are many new developments which are keeping investors and analysts occupied. In Egypt there is also a buzz around cryptocurrencies, but they are not allowed to be traded at present. Daily News Egypt looks at the situation to see if there is a future for them in the country.
The current state of Egypt’s cryptocurrency market
On 1 January 2018, an official fatwa (religious edict) was issued forbidding the trade of bitcoins, as they have been deemed haram (forbidden). As trading in bitcoin and other cryptocurrencies is not regulated by any official body, it carries risks and can even be used to finance illegal activities. Commercial and trade transactions should ideally be governed by clear laws and contracts, and this is not the case with bitcoin trading and cryptocurrencies in general.
The Central Bank of Egypt (CBE) has also warned against dealing in bitcoin and other cryptocurrencies, confirming that transactions within Egypt should be limited to approved currencies only. This echoes sentiments that are felt in other countries around the world, where cryptocurrencies are being banned or heavily regulated. But does this mean the end for bitcoin and similar currencies in Egypt?
Tighter regulation: A possibility for the future of cryptocurrencies in Egypt
One possible scenario that could involve cryptocurrencies like bitcoin being legally traded in Egypt would be them being heavily regulated. The CBE could perhaps step in and take a key role in managing and monitoring these financial instruments. However, a defining feature of cryptocurrencies is that they are not centrally regulated. Cryptocurrencies, by their definition, rely on blockchain technology which maintains a decentralised ledger. This record of transactions is stored on users’ computers rather than the mainframes of a central bank. But it could be that a compromise is able to be reached—although this is not likely.
New technology: Another possibility for cryptocurrencies in Egypt
If the current regulatory policy remains in place, perhaps the only solution would be for the cryptocurrencies themselves to change. In fact, new cryptocurrencies are constantly being created, with most offering new technology or at least variations on existing tech. Perhaps one or more of those will offer just the kind of compromise that could be accepted into the current regulatory framework. It would take some time for this currency to be widely accepted and then, only when it gains widespread adoption and becomes relatively stable, will this even be an option. But again, this is not likely, as cryptocurrencies just do not fit in with a centralised system.
Considering other investments
With cryptocurrencies being out of the question at present and looking to be an unlikely prospect for the near future, it is perhaps a good idea for traders to stick to officially approved methods of investment. Another advantage of doing this is that traditional markets have far less volatility than cryptocurrencies, which may not even prove to be worth the buzz surrounding them. Only time will tell.