Cryptocurrencies and Financial Crime in Jordan: A Ban on Innovation?
Amman’s Stance on Cryptocurrency
Since its initial release in 2009, bitcoin and other forms of cryptocurrency have promised to revolutionize transactions, even being adopted by national central banks. However, in Jordan, despite interest from some youth and businesspeople, the changes this new technology promises to bring have been obstructed by outright bans and resistance from the Central Bank of Jordan (CBJ).
Potential Benefits for Jordan’s Economy
Cryptocurrencies could help revitalize Jordan’s semi-rentier economy, which heavily relies on migrant remittances. Digital assets pave the way for efficient, low-cost cross-border money transfers, allowing Jordanians abroad to easily transfer money into the Kingdom.
The Central Bank of Jordan’s Prohibition
Despite this potential, the Central Bank prohibited cryptocurrency even before engaging in research on the topic. According to documents made available to Jordan News, the CBJ first sent out a circular prohibiting “all banks, financial institutions, exchange companies, and payment card companies” from dealing with cryptocurrencies under any possible circumstance in February 2014.
The Ban’s Lifting
The ban wasn’t lifted until over six years later, when the bank published its first cryptocurrency research report in 2020. The main defense of the reluctance to use cryptocurrency is that the technology can be easily misused, whether through hacking, money laundering, or other illegal activities facilitated by the technology’s anonymous capabilities.
Misconceptions and Misuse
- According to Issa Mahasneh, Executive Director of the Jordan Open-Source Association, the bank’s fear of cryptocurrency misuse is “largely exaggerated”.
- Data shows that traditional banks are statistically and historically more prone to hacks.
- The Telecommunications Regulatory Commission (TRC) also bans importing cryptocurrency mining equipment used to mint and verify coins such as Bitcoin.
Suppressed Innovation
The CBJ’s opposition to cryptocurrency is not only hindering its expansion in Jordan but also suppressing innovation. The bank’s centralized group of decision-makers is responsible for the hindrance, according to Tabaa, an expert who has experience dealing with regulators in the UAE, Saudi Arabia, and Switzerland.
Conclusion
In conclusion, the ban on cryptocurrencies and blockchain technology in Jordan is not only hindering innovation but also suppressing financial growth and potential economic benefits for the country. The CBJ must reconsider its stance on digital currencies and consider the benefits they can bring to the economy.