Egypt: Central Bank’s Draft Law Requires Licenses for Crypto-Related Activities

A new banking law drafted for the Central Bank of Egypt (CBE) would make it mandatory to obtain licenses in advance of creating, advertising or operating platforms for issuing or trading cryptocurrencies. The news was reported by online newspaper The Egypt Independent on May 28.

Citing an official source’s remarks to the Egyptian MENA news agency, the Independent states that if passed, the draft bill will also empower the CBE’s Board of Directors to determine and issue rules for the trading and handling of cryptocurrencies in the country.

According to the official source, the draft law reportedly aims to keep pace with fintech developments and the application of new technologies in the banking and financial services sectors.

Pending regulatory rules and procedures to be issued by the CBE’s Board of Directors, the new law will accordingly establish legal status for the electronic authentication of bank transactions, electronic payment orders and transfer orders.

The law will moreover ostensibly provide a legal basis for the electronic settlement, issuance and circulation of electronic checks, as well as electronic discount orders, the Independent notes.

The CBE’s Board of Directors will broadly determine technical criteria that would grant legal authenticity to digital mechanisms equal to traditional papers, the official source reportedly added.

As reported earlier this month, the National Bank of Egypt recently participated in a major multinational and multibank trial of a system for letter of credit transactions using blockchain consortium R3’s platform.

In December 2018, the CBE was reported to be conducting feasibility studies for the prospective issuance of a digital version of the Egyptian pound in order to help cut the costs of issuing and transacting physical coins and banknotes.

The country has nonetheless historically taken a highly risk-averse stance to decentralized cryptocurrencies such as bitcoin (BTC), with the CBE having stepped up its antagonistic rhetoric ahead of the launch of the country’s first crypto exchange in August 2017.