On December 26, 2019, the Qatar Financial Centre Regulatory Authority (QFCRA) announced via a press release posted to Twitter that virtual asset services were no longer allowed in the Doha-based Qatar Financial Centre Authority (QFC). The QFCRA’s decision essentially cut off more than 500 financial firms and other businesses within that location from crypto trading. The QFCRA cited QFC Law No. 7 of 2005 and Financial Services Regulations (FSR) as the reasons and noted that it will penalize businesses that ignore the ban.
What Is Crypto Trading?
Crypto trading is when businesses purchase, sell and trade cryptocurrency, a type of digital asset that’s processed using secure digital encryption known as cryptography. Businesses who deal in cryptocurrencies trade one type for one or more others types of digital currency or physical non-digital assets like government-approved, legal tender, such as fiat money and commodity money backed by commodities like gold and silver. Crypto trading can also involve the use of cryptocurrency to buy products and services.
What Is the QFCRA’s Official Stance?
The QFCRA considers virtual assets to be any type of alternative digital currencies that aren’t related to fiat currency and other types of regulated “monetary instruments.” The QFCRA defined a virtual assets services provider as any “natural or legal person” who performs virtual asset services. It doesn’t matter if only one person initiates or accepts a transaction either. The QFCRA defined virtual asset services in the tweet to include exchange involving trade of virtual currencies for virtual currencies and fiat money, transfer of virtual assets and any transaction related to sale of virtual assets. It also banned the administration or holding of virtual assets and/or any tools that make it possible to control virtual assets.
Why Is This News Important?
Crypto trading is associated with high risk: It doesn’t require the use of a centralized bank or backing from a government entity. It occurs over decentralized networks using many computers, which means that the typically untraceable transactions are conducted without strict legal and regulatory controls. The exchange rates fluctuate wildly with little-to-no forewarning. Money launderers, tax evaders, thieves, terrorists and others often use virtual assets services to exchange cryptocurrency for fiat money or real-world assets in their criminal dealings. Although many standard fiat and commodity currency transactions are now conducted digitally, those transactions, unlike crypto trading, are heavily regulated, traceable and backed by real-world materials. Merchants need to recognize that they can face steep fines and other penalties in a growing number of countries if they’re caught performing business transactions using cryptocurrencies. For example, China and India have also enacted strict bans in recent years.
At Host Merchant Services, we believe that providing merchants with regular global economy updates can help them to adapt rapidly to changes in payment acceptance and protect them from fines and penalties. We want you to have the information you need to be an informed decision-maker so that you conduct transactions in a legal fashion. We also want to make it clear why we don’t offer certain payment acceptance and processing services. For more information about crypto trading or alternative transaction options, contact us today.