| 06 March, 2018

Some banks in UAE ban online cryptocurrency trading

Transactions via licensed brokerage companies are still allowed.

Image used for illustrative purpose

Image used for illustrative purpose

Getty Images

Banks in UAE have banned online trading transactions, involving cryptocurrencies.

The money transfer and compliance departments have called for surveillance of any such transactions undertaken by individuals for such purposes - prohibiting them, Al Ittihad reported.

On the other hand, trading transactions via licensed brokerage companies involved with foreign markets or mutual funds involving Bitcoin or Ethereum are still allowed.

The brokerage companies indicated that in the event of a transaction, the sale and transfer of funds to the customer's bank account takes place within a 48-hour window - otherwise, funds that are deposited for sales can be made verbally at any time and during official working hours.

Several international banks with branches in the UAE, including Citibank, Lloyds and Bank of America, have banned the use of credit cards to acquire cryptocurrencies.

They also issued severe warnings to their employees instructing them not to allow transactions via their bank accounts relating to cryptocurrencies. The banks stressed that any online transactions for cryptocurrencies are strictly prohibited and thus instructed all their employees henceforth.

According to some bankers, the ban on 'virtual currencies' is aimed at protecting their customers from falling prey to frauds resulting from transactions undertaken through such unsecure methods.

Banks do not want to be held liable for the transactions undertaken via cryptocurrencies. Online trading in cryptocurrencies is a high risk that breeds much room for embezzlement. 

Several investors have found it difficult to securely convert cryptocurrencies to digital currencies - carried out at so-called electronic banks.

Investors can carry out online currency exchange via Paypal or with credit cards of some banks - but the fees charged range between 6 to 10 per cent.

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