The Central Bank of the United Arab Emirates (CBUAE) is planning to launch its own digital currency for cross-border and local use, as part of the first of its recently launched Financial Infrastructure Transformation (FIT) programmes.
In a recent announcement, CBUAE presented the FIT program and highlighted its objective of supporting the country’s financial services sector. The central bank stressed that the program would promote digital transactions and enable the UAE’s competitiveness as a digital payment and financial hub.
The first phase of the FIT program includes the issuance of a CBDC. According to the central bank, the issuance of a CBDC would “solve the problems and inefficiency of cross-border payments and help drive innovation for domestic payments, respectively.” According to Khaled Mohamed Balama, Governor of the CBUAE, the FIT program “will support a thriving UAE financial ecosystem and its future growth.”
In addition to a CBDC, the government also plans to launch a unified card payment platform to “facilitate the growth of e-commerce” and an instant payment platform for “support financial inclusion and enable a cashless society” during the first phase of the program.
The FIT program consists of nine initiatives, including those to be launched in the first phase. Initiatives beyond the first phase include an electronic Know Your Customer platform and an innovation center.
On February 7, Dubai’s Virtual Assets Regulatory Authority (VARA) published its long-awaited “Comprehensive Market Product Regulations,” which include comprehensive guidelines on virtual asset activities for projects operating in the emirate. The regulations prohibit the issuance of “anonymous cryptocurrencies”, also known as “privacy coins”, and other related activities.
On February 10, several actors from the United Arab Emirates expressed their sentiments in response to the new development. Saqr Ereiqat, co-founder of Crypto Oasis, recently told Cointelegraph that privacy coins are different from Bitcoin (BTC) and Ether (ETH), where transactions can be traced. The executive said they present a unique challenge, as they could potentially enable illicit activity.
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