The nation of Qatar is a World Financial institution “high-income economic system,” backed by the world’s third-largest pure fuel and oil reserves. It has the third-highest GDP per capita on this planet (by buying energy parity), with very excessive human improvement. Just like different Gulf Cooperation Council states — which additionally embody the United Arab Emirates, Saudi Arabia, Oman, Kuwait and Bahrain — Qatar has needed to take care of the decline in international oil and fuel costs after they first collapsed in 2014, and the scenario has been made much more troublesome by a Saudi-led embargo of the nation that began in 2017.
As a result of Qatar has a small inhabitants, substantial monetary reserves and favorable enterprise situations for funding, it’s in a greater place than most to resist the stress. It has been working towards reducing its reliance on the export of oil and fuel in favor of financial diversification. On Dec. 3, 2018, the nation moved one step nearer towards that purpose by announcing its withdrawal from the Group of Petroleum Exporting International locations to be able to focus extra on its pure fuel export sector.
With the emergence of the COVID-19 pandemic, Qatar has additionally dedicated to a nationwide monetary expertise technique to diversify an economic system that will probably be powered by the world’s second-cheapest photo voltaic power to be able to meet its purpose of increasing the proportion of renewable power in its whole electrical energy technology to 20% by 2030.
Yousuf Al-Jaida, CEO of the Qatar Monetary Heart, explained:
“[COVID-19 related challenges] not solely spotlight the significance of tech and fintech, but additionally accelerates adoption and improvement. We are going to proceed in our efforts to complement and develop the tech and fintech infrastructure in Qatar as an enabling platform and sit up for seeing extra worldwide FinTechs, together with these from the US, simply combine into Qatar’s thriving ecosystem by way of QFC’s FinTech license and big selection of advantages.”
Nationwide fintech technique
Qatar is a number one monetary hub within the Center East. It has been weaving Shariah-compliant blockchain expertise into its present monetary and authorized infrastructure by way of the sector’s emphasis on digital funds with Qpay, Qatar’s largest fintech firm, in addition to cash administration and lending, amongst others, to emerge as a regional fintech hub.
The fintech sector noticed international funding grow from $50 billion in 2017 to $111.eight billion by the tip of 2018, according to Large 4 audit agency KPMG. In 2019, to draw international fintech funding and encourage giant corporations to launch subsidiaries within the nation, Qatar established the Funding Promotion Company, which launched “free zone” incentive packages. Qatar’s sovereign wealth fund has additionally regularly increased its investments in tech and fintech corporations and in expertise funding funds.
The continued coronavirus pandemic has introduced dramatic modifications to the world, forcing governments throughout the globe to make bringing blockchain tech to their monetary providers a precedence. This consists of Qatar, which has developed a nationwide fintech technique set forth by the Qatar Central Financial institution, or QCB, which goals to help the fintech sector in partnership with a number of key native stakeholders together with the QFC and Qatar Improvement Financial institution, or QDB, because the Qatari public sector goals to be the most important spender on blockchain expertise by 2021.
As a part of its fintech technique, the QCB is weighing issuing a central financial institution digital forex, as COVID-19 has led to an elevated curiosity in digital currencies around the globe. “The QCB enormously welcomes the protected use of technological developments that promote monetary stability and inclusion in Qatar,” mentioned a consultant from the QCB’s fintech part. “Issuing a CBDC actually has its advantages in innovation and enabling customers to considerably change the best way they make funds.” The consultant added:
“There’s at the moment no definitive plan to subject CBDC, nonetheless, the QCB is assessing the alternatives that this expertise presents for Qatar and can proceed to analysis the matter earlier than making a ultimate determination.”
In March, the QCB launched its nationwide QR-code-based “Qatar Cell Fee System,” a undertaking designed to extend monetary inclusion and cut back using banknotes within the nation. Its purpose is to allow residents to make use of an digital pockets on their cellphones, full peer-to-peer transactions, and pay for items and providers. It additionally permits for instantaneous withdrawals and money deposits.
“Qatar has demonstrated an unimaginable synergy amongst entities within the pursuit of changing into a world chief in FinTech,” mentioned Mohammed Barakat, managing director of the U.S.–Qatar Enterprise Council. He additionally added:
“Contemplating Qatar’s already present giant cost processing and remittance market and its technique to develop into a regional gateway for an enormous surrounding market, I foresee speedy progress in Qatar’s FinTech sector.”
With Qatar’s border reopened to select flights from low-risk nations on Aug. 1, the QDB just lately launched a fintech incubator (for early-stage start-ups) and an accelerator program (for mature corporations) that can cater to native and international entrepreneurs. In an try to assist the fintech group community and collaborate, the QFC is offering “FinTech Circle,” a coworking house the place qualifying fintech corporations can work without spending a dime for 12 months. The QFC — which claims to have over 900 companies as shoppers and $20 billion in mixed whole belongings underneath administration — operates its personal authorized, regulatory and tax infrastructure.
“From Fintech’s early emergence as a challenger to a standard monetary providers sector to its position at present as a change catalyst and enabler, it’s protected to say that our trade has come a great distance,” explained Abdulaziz bin Nasser al-Khalifa, CEO of the QDB. ”Blockchain is following swimsuit, with 10% of world GDP anticipated to be saved on blockchain by 2027.” He additionally added:
“In Qatar, blockchain and different rising applied sciences can play a significant position in Qatar’s total financial transformation, particularly within the digitisation of varied sectors, the place they are often utilized in 4 key areas: authorities to citizen, enterprise to shopper, authorities to enterprise, and enterprise to enterprise.”
Combating cryptocurrency cash laundering and terrorist financing
Qatar has joined numerous nations throughout the globe which are implementing stricter laws to fight the illicit use of cryptocurrencies in terrorist financing and cash laundering.
In December 2019, the QCB adopted new rules in type of Circulars 19, 21, 23 and 46 of 2019, which prohibit digital asset suppliers providers, or VASPs, from working in Qatar to be able to fight cash laundering and terrorist financing, bringing its laws in keeping with Monetary Motion Process Power suggestions, which embody adopting a risk-based strategy to Anti-Cash Laundering and Combatting the Financing of Terrorism and to hold out threat assessments. The laws established penalties for violating the legislation within the type of monetary sanctions and doable imprisonment, and it requires complete cooperation from worldwide companions resembling america, China, India, Australia, Bangladesh, Malta, Pakistan and extra.
Following Qatar’s AML regulatory updates, the Qatar Monetary Markets Authority, or QFMA, and the Qatar Monetary Heart Regulatory Authority, or QFCRA, additionally issued comparable notices in December 2019 requiring all services involving cryptocurrencies to be banned all through the QFC till additional discover as a reminder that VASPs are usually not included inside the scope of the QFCRA and QFMA licenses, and that any agency performing as a VASP is working exterior the scope of its license.
For the needs of the QCB circulars and the QFMA and QFCRA notices, the QFCRA defines digital asset providers broadly because the alternate between digital belongings and fiat currencies; alternate between a number of types of digital belongings; switch of digital belongings; safekeeping and/or administration of digital belongings or devices enabling management over digital belongings; and participation in and provision of economic providers associated to an issuer’s provide and/or sale of a digital asset. Nevertheless, safety tokens or different digital monetary or financial devices which are regulated by the QFCRA, the QCB or the QFMA are usually not included within the ban.
For instance, in accordance with the QCB consultant, cryptocurrency debit playing cards can’t be issued by monetary providers suppliers in Qatar. A cryptocurrency debit card operates in a largely comparable strategy to every other standard pay as you go debit card, however as a substitute of topping up the cardboard up from an atypical checking account, funds are transferred from a cryptocurrency pockets. The cardboard supplier then mechanically converts the cryptocurrency to the fiat forex of alternative.
Wirecard, the main European fintech cryptocurrency debit card supplier — which on the finish of June imploded into the area’s largest company accounting scandal by declaring chapter because of accounting manipulations and worldwide cash laundering allegations — has been providing cost processing providers to Qatar Airways since 2013. Such preparations of transferring cryptocurrency from a pockets and conversion to fiat forex are now not permitted in Qatar underneath the brand new cryptocurrency rules.
Because the consultant from QCB’s fintech part said:
“Qatar is at the moment assessing the advantages and dangers related to digital belongings and issues such because the taxation of digital belongings will type a part of that evaluation.”
Fahad Al Dosari, Qatar’s industrial attache to the U.S., added that “Qatar is without doubt one of the most steady economies on this planet, and we provide robust monetary incentives for US-based corporations, like our 20-year tax holidays for corporations working in Free Zones.” He additionally added:
“Below the management of His Highness the Emir Sheikh Tamim bin Hamad Al Thani, all of Qatar’s authorities companies are dedicated to supporting US funding within the area and making Qatar a fintech hub for the Center East.”
It ought to be famous that the U.S. and Qatar should not have a double taxation agreement, however each nations signed an settlement to enhance worldwide tax compliance and to implement the Overseas Account Tax Compliance Act.
Moreover, the U.S. is an in depth protection and safety ally of Qatar, and in 2018, the 2 nations signed a memorandum of understanding relating to the combat towards terrorism and its financing and relating to combating cybercrime.
“Terrorist networks have tailored to expertise, conducting advanced monetary transactions within the digital world, together with by way of cryptocurrencies. IRS-CI particular brokers within the DC cybercrimes unit work diligently to unravel these monetary networks,” pointed out U.S. Treasury Secretary Steven Mnuchin after the Division of Justice introduced the most important ever seizure of cryptocurrency belongings utilized by terrorist organizations, following a multiagency investigation conducted by the Federal Bureau of Investigation, Immigration and Customs Enforcement’s Homeland Safety Investigations division, and the IRS’ Felony Investigation division. The investigation utilized Chainalysis’ crypto investigative instruments.
U.S. taxpayers and their associated corporations which have “operations” in Qatar should file IRS tax Type 5713 with their revenue tax returns to be able to keep away from punitive penalties.
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