UAE Central bank says No to cryptocurrencies but yes to Fintech office

The United Arab Emirates’ central bank will establish a Fintech office ‘in the near future’ to support financial innovation in the banking sector in coordination with other national authorities, its governor stated recently during Middle East Banking Forum in Abu Dhabi. According to Mubarak Rashid Al Mansouri, “The aim of the FinTech Office will be to position the Central Bank as the coordinating authority, as the author of prudential market conduct regulatory requirements, and as an enabler and facilitator of FinTech activities in the UAE."

In the UAE, there are several stakeholders developing fintech initiatives, including Abu Dhabi Global Market (ADGM), Dubai International Financial Centre (DIFC), and Emirates Securities and Commodities Authority (ESCA). “Our aim is not to create another initiative that competes or contradicts with the other initiatives… we will not be doing sandboxes. Our effort is to cooperate with other entities, so that we have a UAE-approved regulatory framework. Then once this is done, we will push this agenda regionally because we also want our fintech to be cross-border,” the governor said.

“For fintechs to flourish, they need regulatory acceptance, and if this regulatory acceptance is not present onshore, you are by default eliminating a big chunk of the country,” he added. Al-Mansouri said the central bank is not supportive of cryptocurrencies at this point, pointing out that they require further study. “It is a mandate of the FinTech Office to look into such matters and to coordinate with other central banks in the region,” he said.

Speaking at the event he stated, “I have recently seen a very interesting crime using cryptocurrency, and it’s really amazing how illicit or terror financing groups hide behind such technology. So there is no visibility on who is behind it. It has no store of value. You’ve seen the cryptocurrency yoyo… You cannot entrust your economy or your currency to such a mechanism,” he added.