Legal Compliance & Taxation Outlook of the Middle East - Espay Exchange - PowerPoint PPT Presentation

About This Presentation

Legal Compliance & Taxation Outlook of the Middle East - Espay Exchange


Whether you are planning for establishing a white label crypto exchange software development company or a centralized trading development in the Middle East, you must know about compliance and taxation outlook in this region. This article will give you a better understanding of legal regulation and taxation in the Middle East. – PowerPoint PPT presentation

Number of Views:51


Transcript and Presenter's Notes

Title: Legal Compliance & Taxation Outlook of the Middle East - Espay Exchange

(No Transcript)
  • The industry of Blockchain and Cryptocurrency,
    after gaining significant impact over the
    economics of the world, has reached a very
    crucial point. The global market is not evolving
    fast enough to deferring large financial for
    blockchain and Cryptocurrency and preventing
    major companies to support their claims. Some of
    the development had made investors progressively
    familiar with this fact that they must not take
    any using or buying digital currency decisions
    for granted.
  • Undoubtedly, economic experts are confident about
    the hidden potential and power of this
    Cryptocurrency. Everyone is aware of the fact
    that it can bring solutions to many real-time
    issues and will earn its place in our everyday
  • However, some popular events occurred in 2018 had
    turned the global eyes to the Middle East in
    regards to the development of Cryptocurrency. The
    event that earned the first place in the list is
    the launch of Emirates Blockchain Strategy 2021
    in UAE in April 2018. This event highlighted the
    aim of the government to switch 50 percent of
    their transactions onto the blockchain. With this
    significant change, UAE will be capable of saving
    77 million working hours every year and 11
    billion in transaction costs.

Middle East
  • Two Popular Jurisdictions in the Middle East
  • There are two jurisdictions present in the Middle
    East that have sought to codify regulations of
    crypto exchanges, white label cryptocurrency
    exchange companies, crypto assets, and related
  • The Abu Dhabi Global Market (ADGM) A free zone
    in the Emirate of Abu Dhabi in the United Arab
  • The Kingdom of Bahrain

Middle East
  • ADGM has managed to be the first regulator in the
    region and has issued Guidelines on Regulation of
    ICOs and virtual currencies on 9 October 2017.
    And on 25 June 2018, this jurisdiction has also
    issued guidelines on Regulation of Crypto Asset
  • The ADGM is currently licensing crypto-asset
    exchanged and has managed to become the first
    jurisdiction in the UAE to permit such a license.
  • However, opening a crypto-asset exchange in the
    ADGM is time-consuming, complicated, and
    expensive. ADGM aims to set the highest standard
    for crypto-asset regulation in the Middle East.
  • The authorization fee for crypto-asset exchange
    is 125,000. Additionally, license holders have
    to pay 60,000 per year as a supervision fee.

The Kingdom of Bahrain
  • Middle East Bahrain has already launched several
    initiatives, including Central Bank of Bahrain
    Regulatory Sandbox (launched in May 2017), and
    Bahrain FinTech Bay a fintech ecosystem
    established on 30 Aug 2018.
  • In February 2019, Bahrain managed to become the
    first Middle Eastern country that published
    regulations on crypto assets in the form of a
    crypto module of the Bahrain Rulebooks Central
    Bank. This Bahrain or directive governs matter
    regarding compliance, licensing, risk mitigation,
    security, and issues licenses for several
    regulated crypto asset services. 
  • Now, lets discuss crypto regulations in
    different regions.

  • Crypto Regulatory Sandbox 30 companies are
    approved by the Central Bank of Bahrain (CBB) for
    its regulatory sandbox half of them are
    Cryptocurrency service providers including
    exchanges. The Bahraini Regulatory Sandbox
    permits companies to test their technology-based
    innovations solutions that are relevant to
    fintech or the financial sector.
  • In Bahrain, the governor of the Central Bank has
    issued a warning against cryptocurrencies like
    bitcoin. A significance parliamentary session
    took place in the Shura Council, the governor of
    the Central Bank announced that the bitcoin is
    not recognized by any sort of financial
    institution. He also declared that using bitcoin
    in Bahrain is not legal nonetheless, Bharani
    citizens have the right to make investment in
    cryptocurrencies outside the limits of Bahrain. 
  • Trading Ban No
  • Banking Ban NO
  • Tax Haven Region- No
  • Best Place for License- No

  • Crypto Regulatory Sandbox In January 2018, the
    Central Bank of Egypt also issued a warning
    against the buying and selling of the
    cryptocurrencies, like bitcoin. The major reason
    behind the issuance of this warning was the
    highest risk associated with Cryptocurrencies.
    The Central Bank of Egypt declared an EGP 1 Bill
    Fintech fund and regulartory sandbox (Innovative
    Financial Technology Application Lab for new
    applications). The Central Bank of Egypt also
    stated that commerce within the Arab Republic of
    Egypt is limited to the authorized paper
    currencies permitted by the Bank.
  • Trading Ban only allows licensed Cryptocurrency
  • Banking Ban NO
  • Tax Haven Region- No
  • Best Place for License- No since many regulatory
    laws are still unclear

  • Crypto Regulatory Sandbox On April 22, 2018, The
    Central Bank of Iran declared that it is
    forbidden the handling cryptocurrencies by every
    Iranian Financial Institution, including credit
    institutions and banks. The Central Bank also
    banned currency exchanges from trading virtual
    currencies or adopting measures to promote and
    facilitate them.
  • This decision made by the bank cause many
    difficulties for many individuals or financial
    institutions who thought virtual currencies can
    be a solution for the business industry and
    international sanctions. They also thought
    virtual currencies can help in shaping the future
    of banking especially when such currencies are
    transparently and precisely regulated so that
    people in the country can be stopped from trading
    them fraudulently and secretly.
  • Before the ban was declared, the IT chief of The
    Central Bank had reported that the Central Bank
    had considered the adoption of a national virtual
    currency, either to be made by the Bank or other
    entities. The major motivation for establishing
    such a currency was that it could be used as a
    replacement for the US dollar.
  • Trading Ban Yes
  • Banking Ban Yes
  • Tax Haven Region- No
  • Best Place for License- No

  • Crypto Regulatory Sandbox The supervision by
    Israel on regulated Financial Services Law
    requires individuals that are engaging in
    offering services involving financial assets to
    get a license from Financial Services
    Supervision. Virtual Currency is incorporated in
    the definition of Financial Assets.
  • A license will be issued to the citizen of Israel
    or any resident who has managed to reach the age
    of majority, is lawfully competent, and has not
    been announced bankrupt or, is not needed to
    dissolve in the case of a corporation.
  • Some additional prerequisites for licensing
    comprises that the license has a minimum amount
    of equity and, if a person, has not been
    condemned of a crime that due to its nature makes
    the license incompetent to handle financial
  • The Bank of Israel also issued a statement on
    February, 19, 2014, which warned the public
    against the handling of virtual currencies. This
    warning was able to lay out the risks associated
    with buying and selling in virtual currencies,
    including money laundering, fraud, and financing
    of terrorism, between others.
  • Trading Ban No
  • Banking Ban No
  • Tax Haven Region- No
  • Best Place for License- Yes, you can easily get a
    crypto exchange license in Israel

  • Crypto Regulatory Sandbox In a bid to become a
    leader in blockchain technology, the UAE launched
    the UAE Blockchain Strategy 2021 pursuant to
    which 50 of government transactions will be
    conducted using Blockchain technology by 2021.
    The Financial Services Regulatory Authority has
    become the first regulator in the UAE that issued
    detailed guidance and regulations based on
    carrying out Cryptocurrency related activities.
    The FSRA also issued supplementary guidelines to
    regulate ICOs and virtual currencies.
  •  In 2017, The Central Bank of UAE issued stored
    value regulations. According to these
    regulations, all types of virtual currencies and
    their transactions are prohibited in UAE. All
    types of currencies and bitcoin that could be
    used as a medium of exchange are defined as a
    virtual currency in the regulation of Central
    Bank. Nonetheless, there is no definition for the
    functionality of virtual currency as a currency,
    security, or commodity.
  • The governor of the Central bank stated that
    currencies like Bitcoin do not come under these
    regulations. According to the governor, a digital
    unit can be used as a medium to exchange and any
    kind of stored value can be described as Virtual
    Currency. Therefore, these regulations can not
    apply to bitcoin or any other cryptocurrencies.

  • Trading Ban No
  • Banking Ban No
  • Tax Haven Region- No
  • Best Place for License- Yes
  • Currently, Cryptocurrency has managed to gain
    support in the Middle East and the desire for the
    innovation of this technology is progressively
    growing. This region has opportunities and the
    potential to become a big player in advancement
    in this technology and to lead the way for its
    regulation that offers immense benefits to all.
  • In the Middle East, a strong foundation is laid
    in the first ten years of blockchain technology
    and Cryptocurrency. Especially, in the UAE, a
    skilled workforce and vast resources will be used
    to drive the future of the crypto.

Crypto Taxation Outlook
  • One of the most significant questions that come
    from permitting investments in and the usage of
    cryptocurrencies is the problem of taxation. In
    this situation, the major challenge arises to be
    how the cryptocurrencies and specific activities
    can be categorized for the purpose of taxation.
    This is important because whether profits made
    from selling or mining cryptocurrencies are
    categorized as capital gains or income
    consistently finds out the application tax
  • According to a survey, Israel has categorized
    cryptocurrencies differently for tax purposes.
    Israel has managed to tax Cryptocurrency as an
  • Even though virtual currencies are not
    acknowledged as actual currency by the Bank of
    Israel, the Israel Tax Authority has planned that
    the utilization of cryptocurrencies must be
    defined as a means of virtual payment and
    should also subject to taxation.
  • Particularly, for the main idea of income tax and
    value-added tax prerequisites, virtual currency
    is considered as an asset and is taxed
    according to the appropriate transaction
    classifications under the Income Tax and the
    Value Added Tax Law, 5736-1975.
  • The Israel Tax Authority needs trade
    transactions documentation including virtual
    currency to facilitate authentication of their
    existence as well as scope.

Final Thoughts
  • Whether you are planning for establishing a white
    label crypto exchange software development
    company or a centralized trading development in
    the Middle East, you must know about compliance
    and taxation outlook in this region. This article
    will give you a better understanding of legal
    regulation and taxation in the Middle East.

Thank You
Espay Exchange
Write a Comment
User Comments (0)