To allow cross- border transactions between both the countries, the central banks of Saudi Arabia and United Arab Emirates (UAE) are working together on a cryptocurrency. Talking on the sidelines of Arab Monetary Fund (AMF) meeting, Mubarak Rashid Al-Mansouri, UAE Central Bank governor divulged details about the joint project between the Saudi Arabian Monetary Authority (SAMA) and the institution. The project is for developing a cryptocurrency based on blockchain that will help in cross- border transactions between UAE and Saudi Arabia.
According to a regional publication, Al- Mansouri stated that this is the first time that authorities of two countries are cooperating with each other for using blockchain technology. Further disclosing more details on this matter on the Gulf News, he said that both countries’ monetary institutions are undertaking research efforts for studying ‘the concept of developing a digital currency between the UAE and Saudi Arabia’.
The report mentions the statement of Central Bank of the UAE as,“CBUAE and SAMA intend to execute a joint crypto-currency and Distributed Ledger Proof-of-Concept (PoC). The PoC’s design mainly focuses on the transfer of ownership of a central bank asset (crypto-currency) among participants.
Pertinently, the central banks’ cryptocurrency will not be available for retail consumers. Instead, the digital tokens will be issued and exchanged between the two central monetary authorities as well as a number of commercial banks in both countries – all of whom will be participants in the cryptocurrency’s blockchain.”
Also, Al-Mansouri confirmed that the regulations are being drafted for the FinTech sector, precisely crowd funding platforms. The official from the central bank, without it being referred as ICO token sales, mentioned challenges that are being faced by them in drafting regulations without restraining innovation in new technologies.
Al-Mansouri also said, “Crowdfunding platforms and blockchain technologies are a case in point,” “Crowd-funding platforms, for example, have gained widespread attention and growth over the previous few years. At the central bank of the UAE, we started developing regulations in this regard in 2016 in order to safeguard the financial system and protect consumers; this project is at a final stage.”