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Is Egypt ready to accept cryptocurrencies?

How do the authorities and the population of Egypt relate to cryptocurrencies? Until 2015, it was not an easy question to answer. And not because there was no one in this country who knew about the existence of a new type of digital assets but because this topic was simply not raised and not discussed. It seemed that Egypt simply existed outside the global cryptocurrency space. For the first time, the Central Bank of Egypt issued a statement on cryptocurrencies in May 2015, unequivocally declaring Bitcoin and other blockchain currencies an illegal means of payment and prohibiting the country’s financial institutions from working with them. Explaining this decision, the authorities motivated this decision by the fact that the unregularity of digital currencies is an incentive to use it in financing illegal activities and tax evasion. The authorities’ concern was also supported by Grand Mufti Shawki Allam, calling Bitcoin an unacceptable medium of exchange and an illegal form of money.

In August 2017, the first exchange of fiat currencies for digital currencies was opened in Egypt. And already in December 2018, the country’s authorities announced that they were ready to start creating a state digital currency. The central bank is considering the possibility of issuing a digital version of the Egyptian pound as an effective and secure means for conducting transactions between countries and banks.

According to many experts, the introduction of cryptocurrencies into the Egyptian economy would increase the country’s GDP by more than 40%. While countries and central banks around the world initially viewed cryptocurrency as a competitor to the national currency and a potentially destructive force, recent trends and sentiment are beginning to shift towards digital means.

Egypt is no exception. It is estimated that more than 1.7 million people, or 1.8% of the total population of Egypt, currently own cryptocurrency. The demand for digital assets in Egypt has increased dramatically over the past 2-3 years. In 2021, the volume of transactions with cryptocurrencies in the country amounted to more than 2.2 million Egyptian pounds. This growth is accompanied by a large involvement of the young population in the world of digital financial relations.

Egyptian economist Wael al-Nahhas says that young Egyptians are “Ready to invest in cryptocurrencies in small amounts, despite the high volatility of the market.”

In April 2021, the Central Bank of Egypt (CBE) allowed banks to issue electronic currencies under its supervision, provided that each coin in the payment service will be equal to the value of the Egyptian pound. The new edition of the rules on currency circulation in Egypt states that “the issue of electronic currencies is limited only to banks under the supervision of the Central Bank and have received its prior consent to issue them”.

Obviously, there are still a lot of questions regarding the Egyptian government’s approach to cryptocurrencies. But experts are optimistic about any attempt by the state to use new technology for the benefit of the population and the economy.

The fact that Egypt has passed the road from complete denial to assessing the impact of digital assets in a very short time signals that it is ready to become part of the digital financial world and even open new industries in the economy. Perhaps the lifting of the ban on working with digital currencies was not accidental. Most likely, the Egyptian government has devoted a lot of time to studying the similar experience of other progressive countries and is now ready to adapt it to its goals and needs with minimal risks.

Cryptocurrency in Egypt

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“At the heart of Islamic finance is the prohibition on charging interest. Islamic finance has always been focused on not shifting most of the risks to one side of the financial relationship. In Islamic finance, balance and transparency of transactions should be observed, which can negatively affect our society,” says Mohammed AlKaff AlHashmi, one of the founders of IslamicCoin.

Islamic Coin is aimed at 1.1 billion Muslims using the Internet. The project creates convenient tools designed for users who have never been owners of cryptocurrencies. Thus, the creators of IslamicCoin are expanding the capabilities of the Muslim online community by providing it with opportunities to use a new form of digital money and involving them in the modern digital world.

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