KHALEEJ TIMES, Wednesday, Mar 14, 2018 | Jamadi Al Thani 26, 1439
No credit to cryptos
Banks in the UAE have decided that they would not allow purchase of
cryptocurrencies through credit cards and also not entertain digital currency
Banks in the UK and the US have also banned use of credit cards to buy Bitcoin
and other cryptocurrencies, fearing plunge in their value will leave customers
unable to repay their debts. Lloyds Banking Group, JP Morgan Chase and Citigroup
have banned their credit card customers from buying cryptocurrencies.
Banks in the UAE have also reportedly instructed their employees not to allow
transactions via their bank accounts relating to cryptocurrencies. Bankers say
that the ban on virtual currencies is aimed at protecting their customers from
falling prey to frauds resulting from transactions undertaken through such
Banks do not want to be held liable for transactions undertaken via
cryptocurrencies. Online trading in cryptocurrencies is a high risk that breeds
much room for embezzlement.
"Globally, we have made the decision to no longer permit credit card purchases
of cryptocurrency. We will continue to review our policy as this market
evolves," Citi bank said in a statement to Khaleej
Emirates NBD, Dubai's largest bank, also confirmed that it doesn't accept
cryptocurrencies for remittances. However, the bank doesn't prohibit customers
from undertaking transactions in blockchain-based trading platforms and
"Emirates NBD does not accept cryptocurrencies or support cryptocurrency
remittances but it does not prohibit customers from undertaking transactions
involving blockchain-based trading platforms and cryptocurrencies," it said in a
statement to Khaleej Times.
"Emirates NBD has policies, systems and controls to detect and prevent financial
crime including money laundering, terrorist financing and breaches of
international sanctions in line with its regulatory obligations and the
expectations of our correspondent banks. It is, therefore possible that some
transactions associated with cryptocurrencies may be rejected by Emirates NBD or
declined as a result of rejections by other domestic or international
correspondent banks," the statement said.
Meanwhile, HSBC Middle East refused to comment.
Mastercard, the world's second biggest payments network, said last month that
customers buying cryptocurrencies with credit cards fuelled a 1 percentage point
increase in overseas transaction volumes in the fourth quarter.
The UAE Central Bank governor Mubarak Rashid Al Mansouri said earlier this year
that UAE and Saudi Arabia are considering introducing cryptocurrency for
Speaking recently at a forum in Abu Dhabi, Al Mansouri said the underlying
technology behind cryptocurrency and other financial technology is beneficial to
the banking sector.
According to S&P, many central banks are carefully looking at cryptocurrencies
and exploring the potential for creation of a central bank-backed
Bitcoin, the mother of all cryptocurrencies, has seen head-spinning volatility
over last few months, many becoming millionaires overnight and many more went
bust as well when cryptocurrencies nosedived following concerns from different
quarters around the world. Its price plunged from nearly $20,000 to less than
$10,000 in just a few month time. It hit an all-time high of $19,498 on December
12, 2017 but fell by over 30 per cent to $13,546 on January 1, 2018, reflecting
extremely volatility days of the currencies. Year-to-date, Bitcoin has fallen by
29 per cent to $9,600 on Monday morning.
A survey by earlier this month by a consumer product services website Finder
disclosed that Ethereum will see the biggest increase in market cap at 212 per
cent followed by Bitcoin at 194 per cent and Bitcoin Cash at 123 per cent.
In terms of price prediction, Ethereum is projected to trade $2,550 by end of
this year; while Bitcoin and Bitcoin Cash are forecast to trade at $29,533 and
$2,721, respectively, taking the top two spots, according to the report.
In the UAE, the major cryptocurrencies in demand still remain to be Bitcoin,
Ripple, Ethereum and Litecoin, said Vijay Valecha, chief market analyst, Century
"However, Cardano, Neo, Monero and Stellar are gaining a lot of demand in the
past few months. Investors are advised to avoid cryptocurrencies as a major
investment source and be very careful if investing in them," he added.
According to S&P, there were 1,523 outstanding cryptocurrencies on February 10,
2018 with a market cap of $394 billion. On Monday, coinmarketcap.com's data
showed that 916 cryptocurrencies' market cap was around $352 billion,
Mohamed Damak, primary credit analyst, S&P, said cryptocurrencies as a
speculative instrument which would have an insignificant effect on global
financial stability if its value were to collapse. But retail investors would
endure most of the impact, while rated banks wouldn't feel the hit since they
are largely insulated, thanks to their limited direct and indirect exposure and
"More importantly, we believe that blockchain technology - which is what
underpins cryptocurrencies, enabling the creation of a shared digital
transaction ledger - could be a positive disrupter for various financial
value-chains. If widely adopted, blockchain could have a meaningful and lasting
impact on the celerity, traceability and cost of financial transactions," Damak
said, adding that cryptocurrencies are still not widely accepted as payment
instruments, although the list of companies accepting them have increased over
the past few years.