On 31 August 2017, Bitcoin Egypt takes aim at propelling the Egyptian Pound into the digital future. As with anything crypto related, however, it is not without controversy. Already it faces regulatory pressure from the Central Bank of Egypt that could potentially suppress those plans.
Take a journey in time back to 1994. Blockbuster ruled the movie industry with brick-and-mortar establishments on every major corner. Netflix was but a Reed Hastings wet dream, and Google a Larry Page research project, if that. Blockchain had yet to change the fabric of digital transactions, and Egypt was free of capital control. Egyptian Law No. 38 of 1994 brought the latter quickly to an end. This legislation established certain “competent authorities” who could lawfully deal in foreign exchange, consolidating this authority primarily with the central bank and closely tied entities. These implications are still relevant today, and the Bitcoin Egypt project has brought them back into focus.
With less than one week until launch, Bitcoin Eqypt has yet to hurdle this obstacle. Crypto currency is covered under the umbrella of foreign exchange by the Egyptian Financial Supervisory Authority, so unless BE can make unprecedented magic happen before then, it will be unable to launch without license. As of now, no motion has been made to pursue a license, so the likelihood of achieving the deadline is very low. As a fallback plan, Rami Khalili – founder of Bitcoin Egypt – will begin alpha testing on the 31st without going public.
The CBE has established a hardline stance on cryptocurrency. Gamal Negm, its deputy governor, made this abundantly clear saying it would
“never deal with any virtual currencies.”
This distaste toward virtual currencies is fostered by the perceived relationship between the decentralized currencies and black market operations. As the Egyptian government lashes out with increased litigation against digital currency proponents, the black market only grows stronger, despite claims from the CBE Chairman, Hisham Ramez, to the contrary. The most recent figure estimates that the Egyptian black market carries a market cap of roughly $35 billion spread between several commodities and currencies.
There is still a chance that the CBE will fold. Digital currency woes are but a small blip on their radar. As reported by Reuters, Egypt will miss out on as much as $290 million in United States monetary aid as its progress toward human rights continually disappoints. Couple this issue with Egypt’s soaring unemployment/crime rates, rolling blackouts, and fuel shortages and it becomes obvious that it could use the economic buoyancy, tax income, and distraction that an introduction to digital currency markets could provide. Even if the CBE does finally cave, bureaucratic processes will ensure that legislative changes do not happen until long after August 31.
Bitcoin Egypt must fight considerable headwinds to achieve a successful launch, but it is not without allies. It is backed by the full faith of the crypto community and the inertia of digital currency. Blockchain is sweeping across the world with an unstoppable fury, and the CBE will come to realize its potential sooner or later. For the sake of its population, let’s hope enlightenment is reached before Egypt is ravaged by its current failing policies.
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