General

Qatars National Solarized Fintech Strategy Amid COVID-19 Pandemic

The nation of Qatar is a World Bank “high-income economy,” backed by the world’s third-largest pure gasolene and oil militia. It has the third-highest GDP per capita on this planet (by buying energy parity), with very excessive human improvement. Similar to different Gulf Cooperation Council states – which extraly embody the United Arab Emirates, Saudi Arabia, Oman, Kuwait and Bahrain – Qatar has necessary to take care of the decline in international oil and gasolene costs after they first collapsed in 2014, and the scenario has been made much more difficult by a Saudi-led embargo of the nation that began in 2019.

Because Qatar has a small inhabitants, substantial medium of exchange militia and favorable enterprise situations for funding, it’s in a greater place than most to resist the strain. It has been working towards reduction its trust on the export of oil and gasolene pro of financial diversification. On Dec. 3, 2019, the nation touched one step nearer towards that purpose by saying its withdrawal from the Organization of Petroleum Exporting Countries as a way to focus extra on its pure gasolene export sphere.

With the emergence of the COVID-19 pandemic, Qatar has extraly dedicated to a nationwide medium of exchange know-how proficiency to diversify an financial system that power be powered by the world’s second-cheapest pic voltaic power as a way to meet its purpose of growing the proportion of inexhaustible power in its whole electricity technology to 20% by 2030.

Yousuf Al-Jaida, CEO of the Qatar Financial Center, defined:

“[COVID-19 related challenges] not only highlight the grandness of tech and fintech, but also accelerates adoption and development. We will continue in our efforts to enrich and develop the tech and fintech infrastructure in Qatar as an facultative platform and look forward to seeing more international FinTechs, including those from the US, easily integrate into Qatar’s thriving ecosystem via QFC’s FinTech license and wide range of benefits.”

The QFC has reported it grew by 35% in 2019, and in accordance with its web site, it now has over 900 purchasers from varied spheres, each medium of exchange and non-financial.

National fintech proficiency

Qatar is a number one medium of exchange hub inside the Middle East. It has been weaving Shariah-compliant blockchain know-how into its present medium of exchange and authorized infrastructure via the sphere’s emphasis on digital monetary imagination with Qpay, Qatar’s largest fintech firm, additionally to cash administration and lending, amongst others, to emerge as a regional fintech hub.

The fintech sphere detected international funding develop from $50 billion in 2019 to $111.eight billion by the tip of 2019, in accordance to Big Four audit agency KPMG. In 2019, to draw international fintech funding and encourage giant corporations to launch subsidiaries inside the nation, Qatar established the Investment Promotion Agency, which launched “free zone” incentive packages. Qatar’s sovereign wealth fund has extraly on a regular basis elevated its investments in tech and fintech corporations and in know-how funding monetary imagination.

The current coronavirus pandemic has introduced dramatic adjustments to the world, forcing governments throughout the globe to make delivery blockchain tech to their medium of exchange companies a precedence. This contains Qatar, which has developed a nationwide fintech proficiency set forth by the Qatar Central Bank, or QCB, which goals to assist the fintech sphere in partnership with a number of key native stakeholders together with the QFC and Qatar Development Bank, or QDB, because the Qatari public sphere goals to be the most important spender on blockchain know-how by 2021.

As a part of its fintech proficiency, the QCB is advisement issuance 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 greatly welcomes the safe use of technological advancements that promote financial stability and inclusion in Qatar,” mentioned a advisor from the QCB’s fintech part. “Issuing a CBDC sure as shot has its benefits in innovation and facultative users to importantly change the way they make defrayments.” The advisor added:

“There is presently no definitive plan to issue CBDC, notwithstandin, the QCB is assessing the opportunities that this technology presents for Qatar and will continue to research the matter before making a final decision.”

In March, the QCB launched its nationwide QR-code-based “Qatar Mobile Payment System,” a venture designed to extend medium of exchange inclusion and scale back the usage of banknotes inside the nation. Its purpose is to allow residents to make use of an digital pockets on their cell phones, full peer-to-peer minutes, and invite items and companies. It extraly permits for fast withdrawals and money deposits.

“Qatar has incontestable an tall synergism among entities in the pursuit of becoming a global drawing card in FinTech,” mentioned Mohammed Barakat, manager of the U.S.-Qatar Business Council. He extraly added:

“Considering Qatar’s already existing large defrayment processing and remitment market and its scheme to become a regional gateway for a huge close market, I foresee rapid climb in Qatar’s FinTech sphere.”

With Qatar’s border reopened to choose flights from low-risk nations on Aug. 1, the QDB late launched a fintech brooder (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 neighborhood community and collaborate, the QFC is providing “FinTech Circle,” a coworking house the place qualifying fintech corporations can work without disbursal a dime for 12 months. The QFC – which claims to have over 900 companies as purchasers and $20 billion in mixed whole property below administration – operates its personal authorized, regulative and tax infrastructure.

“From Fintech’s early emergence as a competition to a conventional financial services sphere to its role now as a change catalyst and enabler, it is safe to say that our industry has come a long way,” defined Abdulaziz bin Nasser al-Khalifa, CEO of the QDB. “Blockchain is following go well with, with 10% of worldwide GDP hoped-for to be saved on blockchain by 2027.” He extraly added:

“In Qatar, blockchain and other emerging technologies can play a major role in Qatar’s overall economic transformation, especially in the digitisation of various spheres, where they can be applied in four key areas: government to citizen, business to consumer, government to business, and business to business.”

Combating cryptocurrency cash laundering and violent funding

Qatar has joined a whole sle of nations throughout the globe which are implementing stricter legal guidelines to fight the illicit use of cryptocurrencies in violent funding and cash laundering.

In December 2019, the QCB adopted new rules in type of Circulars 19, 21, 23 and 46 of 2019, which interdict digital plus providers companies, or VASPs, from working in Qatar as a way to fight cash laundering and violent funding, delivery its laws consistent with Financial Action Task Force suggestions, which embody adopting a risk-based method to Anti-Money Laundering and Combatting the Financing of Terrorism and to hold out danger assessments. The laws established penalties for violating the legislation inside the type of medium of exchange sanctions and possible imprisonment, and it requires complete cooperation from worldwide companions such because the United States, China, India, Australia, Bangladesh, Malta, Pakistan and extra.

Following Qatar’s AML regulative updates, the Qatar Financial Markets Authority, or QFMA, and the Qatar Financial Center Regulatory Authority, or QFCRA, extraly issued comparable notices in December 2019 requiring all companies involving cryptocurrencies to be interdicted all through the QFC till extra discover as a admonisher that VASPs are unremarkably not enclosed throughout the scope of the QFCRA and QFMA licenses, and that any agency appearance as a VASP is working exterior the scope of its license.

For the inevitably of the QCB circulars and the QFMA and QFCRA notices, the QFCRA defines digital plus companies loosely because the change between digital property and fiat currencies; change between a number of types of digital property; switch of digital property; guardianship and/or administration of digital property or devices facultative direction over digital property; and participation in and provision of medium of exchange companies associated to an issuer’s provide and/or sale of a digital plus. However, safety tokens or different digital medium of exchange or financial devices which are regulated by the QFCRA, the QCB or the QFMA are unremarkably not enclosed inside the ban.

For instance, in accordance with the QCB advisor, cryptocurrency debit performin card game can’t be issued by medium of exchange companies providers in Qatar. A cryptocurrency debit card operates in a for the most part comparable option to another standard pay as you go debit card, notwithstandin as a substitute of top-hole up the cardboard up from an odd checking account, monetary imagination are transferred from a cryptocurrency pockets. The card provider then robotically converts the cryptocurrency to the fiat foreign money of alternative.

Wirecard, the main European fintech cryptocurrency debit card provider – which on the finish of June imploded into the area’s superior company accounting scandal by declaring chapter because 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 now not permitted in Qatar below the brand new cryptocurrency rules.

Cryptocurrency taxation

As the advisor from QCB’s fintech part said:

“Qatar is presently assessing the benefits and risks associated with digital pluss and matters such as the taxation of digital pluss will form part of that assessment.”

Fahad Al Dosari, Qatar’s business attache to the U.S., added that “Qatar is one of the most stable economies in the world, and we offer strong financial incentives for US-based companies, like our 20-year tax holidays for companies operative in Free Zones.” He extraly added:

“Under the drawing cardship of His Highness the Emir Sheikh Tamim bin Hamad Al Thani, all of Qatar’s government agencies are committed to supporting US investment in the region and making Qatar a fintech hub for the Middle East.”

It must be far-famed that the U.S. and Qatar do not need a double taxation settlement, notwithstandin each nations signed an settlement to enhance worldwide tax compliance and to implement the Foreign Account Tax Compliance Act.

Furthermore, the U.S. is an deep protection and safety ally of Qatar, and in 2019, the 2 nations signed a memoranda of understanding relating to the battle con to violent act and its funding and relating to combating cybercrime.

“Terrorist networks have altered to technology, conducting complex financial minutes in the digital world, including through cryptocurrencies. IRS-CI special agents in the DC cybercrimes unit work diligently to unravel these financial networks,” identified U.S. Treasury Secretary Steven Mnuchin after the Department of Justice introduced the biggest ever seizure of cryptocurrency property utilised by violent organizations, following a multiagency investigation carried out by the Federal Bureau of Investigation, Immigration and Customs Enforcement’s Homeland Security Investigations division, and the IRS’ Criminal Investigation division. The investigation utilised Chainalysis’ crypto investigative instruments.

U.S. taxpayers and their associated corporations which have “operations” in Qatar should file IRS tax Form 5713 with their revenue tax returns as a way to keep away from retributive penalties.

Qatars National Solarized Fintech Strategy Amid COVID-19 Pandemic

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Patricia Bakely

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