Jordan’s Cryptocurrency Regulatory Environment: A Hostile Legal Climate for Digital Currencies

AMMAN, JORDAN - Jordan has taken a negative stance towards cryptocurrency, creating a challenging legal environment for digital currencies in the country. In this article, we will explore the regulatory landscape and the implications for investors.

A Ban on Cryptocurrency Transactions

The Central Bank of Jordan (CBJ) has banned all banks, currency exchange companies, financial institutions, and payment service providers from facilitating any cryptocurrency transactions. This effectively prohibits cryptocurrency trading under Jordanian law.

Risks Associated with Cryptocurrency Trading

The CBJ has also issued warnings about the risks associated with cryptocurrency trading. These include:

• No Legal Tender: Digital currencies do not qualify as legal tender in Jordan.
• No Underlying Commodities or Gold Backing: There is no obligation for central banks or governments to exchange cryptocurrencies for real money or back them by underlying commodities or gold, effectively questioning the value of digital currencies.
• High Volatility and Risk of Devaluation: The price of Bitcoin plummeted from approximately $64,000 in April 2021 to around $38,000 just two months later, highlighting the significant risks involved.

Hacking and Financial Crimes

The CBJ also highlighted the high risk of hacking and financial crimes associated with cryptocurrency transactions. A notable example is the hack of cryptocurrency exchange EXMO in 2020, which resulted in losses of approximately $52 million. With no consumer protection measures in place, investors who fall victim to such attacks have limited recourse to recover their stolen funds.

Advice from Experts

Experts note that regulatory uncertainty surrounding cryptocurrency remains widespread globally, with few countries explicitly prohibiting crypto mining. In contrast, Jordan’s stance on cryptocurrency is notable for its hostility towards the technology, making it an unattractive destination for investors in digital currencies.

Conclusion

Jordan does not provide a favorable legal environment for cryptocurrency investors due to the hostile regulatory climate. The CBJ’s warnings and bans make it difficult for investors to participate in the market, and the risks associated with cryptocurrency trading are significant. As a result, investors may want to consider alternative destinations for their digital currency investments.