The nation of Qatar is a World Financial institution “high-income financial system,” backed by the world’s third-largest pure gasoline 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 embrace the United Arab Emirates, Saudi Arabia, Oman, Kuwait and Bahrain — Qatar has needed to cope with the decline in world oil and gasoline costs after they first collapsed in 2014, and the state of affairs has been made much more tough 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 strain. It has been working towards decreasing its reliance on the export of oil and gasoline in favor of financial diversification. On Dec. three, 2018, the nation moved one step nearer towards that aim by asserting its withdrawal from the Group of Petroleum Exporting Nations so as to focus extra on its pure gasoline export sector.
With the emergence of the COVID-19 pandemic, Qatar has additionally dedicated to a nationwide monetary expertise technique to diversify an financial system that will probably be powered by the world’s second-cheapest photo voltaic power so as to meet its aim of accelerating the proportion of renewable power in its complete electrical energy technology to 20% by 2030.
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Yousuf Al-Jaida, CEO of the Qatar Monetary Middle, defined:
“[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 counterpoint and develop the tech and fintech infrastructure in Qatar as an enabling platform and look ahead to seeing extra worldwide FinTechs, together with these from the US, simply combine into Qatar’s thriving ecosystem through QFC’s FinTech license and wide selection of advantages.”
The QFC has reported it grew by 35% in 2019, and in response to its web site, it now has over 900 purchasers from varied sectors, each monetary and non-financial.
National 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 means 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 world funding develop from $50 billion in 2017 to $111.eight billion by the top of 2018, in response to Massive 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 applications. Qatar’s sovereign wealth fund has additionally regularly elevated its investments in tech and fintech corporations and in expertise funding funds.
The continuing coronavirus pandemic has introduced dramatic modifications to the world, forcing governments throughout the globe to make bringing blockchain tech to their monetary companies 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 Growth 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 foreign money, as COVID-19 has led to an elevated curiosity in digital currencies all over the world. “The QCB drastically welcomes the secure use of technological developments that promote monetary stability and inclusion in Qatar,” mentioned a consultant from the QCB’s fintech part. “Issuing a CBDC definitely has its advantages in innovation and enabling customers to considerably change the way in which they make funds.” The consultant added:
“There may be at present no definitive plan to concern 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 last choice.”
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In March, the QCB launched its nationwide QR-code-based “Qatar Cell Cost System,” a mission designed to extend monetary inclusion and cut back the usage of banknotes within the nation. Its aim is to allow residents to make use of an digital pockets on their cellphones, full peer-to-peer transactions, and pay for items and companies. It additionally permits for instantaneous withdrawals and money deposits.
“Qatar has demonstrated an unbelievable synergy amongst entities within the pursuit of turning into a worldwide chief in FinTech,” mentioned Mohammed Barakat, managing director of the U.S.–Qatar Enterprise Council. He additionally added:
“Contemplating Qatar’s already present giant fee processing and remittance market and its technique to turn out to be a regional gateway for an enormous surrounding market, I foresee speedy progress in Qatar’s FinTech sector.”
With Qatar’s border reopened to pick flights from low-risk international locations on Aug. 1, the QDB lately launched a fintech incubator (for early-stage start-ups) and an accelerator program (for mature corporations) that can cater to native and world entrepreneurs. In an try to assist the fintech neighborhood community and collaborate, the QFC is providing “FinTech Circle,” a coworking house the place qualifying fintech corporations can work free of charge for 12 months. The QFC — which claims to have over 900 companies as purchasers and $20 billion in mixed complete belongings beneath administration — operates its personal authorized, regulatory and tax infrastructure.
“From Fintech’s early emergence as a challenger to a standard monetary companies sector to its position at this time as a change catalyst and enabler, it’s secure to say that our trade has come a great distance,” defined 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 general financial transformation, particularly within the digitisation of varied sectors, the place they are often utilized in 4 key areas: authorities to citizen, enterprise to client, authorities to enterprise, and enterprise to enterprise.”
Combating cryptocurrency cash laundering and terrorist financing
Qatar has joined quite a few international locations throughout the globe which might be implementing stricter legal guidelines to fight the illicit use of cryptocurrencies in terrorist financing and cash laundering.
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In December 2019, the QCB adopted new rules in type of Circulars 19, 21, 23 and 46 of 2019, which prohibit digital asset suppliers companies, or VASPs, from working in Qatar so as to fight cash laundering and terrorist financing, bringing its laws in keeping with Monetary Motion Activity Power suggestions, which embrace adopting a risk-based method to Anti-Cash Laundering and Combatting the Financing of Terrorism and to hold out danger 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 comparable to the US, 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 Middle Regulatory Authority, or QFCRA, additionally issued related notices in December 2019 requiring all companies involving cryptocurrencies to be banned all through the QFC till additional discover as a reminder that VASPs aren’t included throughout the scope of the QFCRA and QFMA licenses, and that any agency appearing as a VASP is working outdoors the scope of its license.
For the needs of the QCB circulars and the QFMA and QFCRA notices, the QFCRA defines digital asset companies 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 monetary companies associated to an issuer’s provide and/or sale of a digital asset. Nevertheless, safety tokens or different digital monetary or financial devices which might be regulated by the QFCRA, the QCB or the QFMA aren’t included within the ban.
For instance, in response to the QCB consultant, cryptocurrency debit playing cards can’t be issued by monetary companies suppliers in Qatar. A cryptocurrency debit card operates in a largely related approach to another typical pay as you go debit card, however as an alternative of topping up the cardboard up from an strange checking account, funds are transferred from a cryptocurrency pockets. The cardboard supplier then robotically converts the cryptocurrency to the fiat foreign money of alternative.
Wirecard, the main European fintech cryptocurrency debit card supplier — which on the finish of June imploded into the area’s greatest company accounting scandal by declaring chapter on account of accounting manipulations and worldwide cash laundering allegations — has been offering fee processing companies to Qatar Airways since 2013. Such preparations of transferring cryptocurrency from a pockets and conversion to fiat foreign money are not permitted in Qatar beneath the brand new cryptocurrency rules.
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Because the consultant from QCB’s fintech part said:
“Qatar is at present assessing the advantages and dangers related to digital belongings and issues such because the taxation of digital belongings will kind a part of that evaluation.”
Fahad Al Dosari, Qatar’s industrial attache to the U.S., added that “Qatar is among the most secure 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:
“Underneath the management of His Highness the Emir Sheikh Tamim bin Hamad Al Thani, all of Qatar’s authorities businesses are dedicated to supporting US funding within the area and making Qatar a fintech hub for the Center East.”
It must be famous that the U.S. and Qatar shouldn’t have a double taxation settlement, however each international locations signed an settlement to enhance worldwide tax compliance and to implement the International Account Tax Compliance Act.
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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 battle 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 means of cryptocurrencies. IRS-CI particular brokers within the DC cybercrimes unit work diligently to unravel these monetary networks,” identified U.S. Treasury Secretary Steven Mnuchin after the Division of Justice introduced the biggest ever seizure of cryptocurrency belongings utilized by terrorist organizations, following a multiagency investigation carried out 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.
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U.S. taxpayers and their associated corporations which have “operations” in Qatar should file IRS tax Kind 5713 with their revenue tax returns so as to keep away from punitive penalties.
The views, ideas and opinions expressed listed below are the writer’s alone and don’t essentially mirror or characterize the views and opinions of Cointelegraph.