• Dr. Omran: Traders of virtual currencies are subjected to fraud and there is no legal framework to allow its circulation
Dr. Mohammed Omran- FRA’s Chairman warned of risks resulted from dealing with digital money -virtual currencies- and all related transactions in light of the fact that they are not subjected to the control of any entity inside Egypt. He added that virtual currencies constitute a manipulation of the official monetary system subjected to control and supervision and all that is related to anti-money laundering laws.
Dr. Omran added that the Authority did not license or codify those digital currencies or any related products. He asserted that the Authority do not allow dealing or use them. He considered that the calls to stimulate investors to enter into these types of transactions, based on the rise of these markets or to ensure the achievement of profitable returns which is a kind of misinformation subjected to legal liability.
Dr. Omran pointed out that Egypt’s stock exchange market is the Egyptian Stock Exchange besides the Small and Medium Enterprises Stock Exchange known as the Nile Stock Exchange. He noted that amendments are being made to the Capital Market Law to complete its legislative frame to establish commodity futures exchange. He added that any other activity to be practiced other than those mentioned shall need new legislations.
Dr. Omran noted that the Authority is keen to help in creating an investment environment capable of attracting funds and encouraging the flow of domestic and foreign investments, however protecting dealers in non-banking financial markets urges the Authority to warn against the rapid changes in the world known as the digital revolution and its growing use. He added that it represents an important variable in the financial services industry and related products, including the use of virtual currencies or digital currencies.
Despite the frantic acceleration of these currencies by speculation through electronic trading platforms or through some of derivatives markets that opened recently to trade in contracts based on those currencies, still ambiguity surrounds those currencies amid warnings from many of the banking and regulatory authorities including the International Organization of Securities Commissions (IOSCO).
FRA’s Chairman added that in light of the fact that these platforms are targeting individual investors through promoting these tools over the Internet, and due to the lack of transparency and clients’ protection mechanisms, there will be a wide scope for financial fraud, especially as it is not subjected to any regulatory or legislative frameworks. He emphasized that investors should be warned from entering into this type of high risk instrument as this will considered as type of gambling. He added that those who deal with these currencies are exposed to the lose of their full money when they accept this high degree of risk. He also stressed that these currencies are not subjected to any of the central banks around the world or to any other regulator. He asserted that investors may also be exposed to hacking or incurred large loses at any time by any authorization or regulation by any regulatory authority in any country.