24 October Dubai(UAE)- The UAE Central Bank on Monday warned about the risks of using digital currencies as a medium of exchange for now, amid mounting risks including massive volatility, speculation and money laundering.
Speaking on the sidelines of the Islamic Financial Services Board’s Summit, Mubarak Rashid Al Mansouri, Governor of the Central Bank, said digital currencies do not go through official channels and cannot be monitored and controlled, thereby posing risks in case it is used to launder money or fund terrorist activities.
“The risks of trading in digital currencies have clearly appeared when the prices of digital currency fell sharply after some countries announced a ban on using initial coin offerings,” state-run news agency Wam quoted Al Mansouri as saying.
The central bank has not issued licences for trading in digital currency in the local market, he added.
The comments are seen as part a growing trend among regulators becoming averse to digital currencies.
“The digital currencies are highly speculative and this is not backed by anything tangible,” Nadi Bargouti, managing director — head of asset management, at Emirates Investment Bank, told Gulf News.
“There has been no endorsement so far from any of the regulators. It’s too early to give any credibility to any cryptocurrency only on the basis of popularity,” Bargouti added.
The main objective of the UAE Central Bank is to maintain the financial stability of the country, said Sally Sfeir Tait, a partner with law firm Clyde & Co.