The UAE and Saudi Arabia–two countries with the second largest combined sovereign wealth funds in the world–have launched their cryptocurrency pilot.
According to the official news agency of the United Arab Emirates, the cryptocurrency of Saudi Emirates is one of the seven initiatives to be implemented in both countries.
In 2016, the Executive Committee of the Saudi Emirati Coordination Council met for the first time in the United Arab Emirates on 19th January. The Council announced that the new cryptocurrency will be used to pay between central and local banks across borders.
The cryptocurrency is an experiment that understands blockchain technology and allows seamless transactions in both countries. An extract from the announcement does not reveal the deployed blockchain, explaining: the virtual currency is based on the use of a distributed database between the central banks and the participating banks on both sides.
It aims to protect the interests of customers, set technology standards and evaluate cybersecurity risks. The project will also determine the monetary policy effect of a central currency.
The Dubai Blockchain Strategy also aims to unlock 25 million hours of economic productivity annually in saved document processing time
— Hamdan bin Mohammed (@HamdanMohammed) October 5, 2016
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In December 2018, the ICO tokens were recognized by the Securities and Commodities Authority of the UAE (SCA). They were also announced to work on a regulatory framework to be released in mid-2019.
The authorities of the UAE are working carefully when dealing with cryptocurrencies, but continue to actively promote the development of blockchain in the country.
In 2016, Sheik Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai, launched a blockchain strategy aimed at transferring all government blockchain documents to 2020.
The Emirates Islamic Bank of the United Arab Emirates also tested blockchain technology by submitting blockchain cheques in 2017. Once the pilot was successful, Emirates NBD, its parent bank, launched the initiative last year and registered one million checks in the first month.
In November 2018, the Hilal Bank of the United Arab Emirates became the first Sharia bank to use blockchain technology for a Sukuk transaction, a bond that conforms to Sharia standards. Some of the leading blockchain and crypto companies have already begun to look to the UAE to increase their services. The country has already welcomed the Huobi crypto exchange and is planning to launch a cross-border payment service with RippleNet in 2019.