In Egypt, the gap between cryptocurrency acceptance and blockchain adoption is widening.
On January 1, 2018, Egypt's grand mufti, Shawki Allam, decreed that the use of cryptocurrencies is incompatible with Sharia Law. Egypt's Financial Regulatory Authority had earlier described the promotion of cryptocurrencies as a "form of deception that falls under legal liability."
Egypt's central bank also warned against dealing in cryptocurrencies in January. Its statement decried instability due to their uncontrolled speculation, decentralized nature, and lack of backing by physical assets. Based on this, the bank said, they lack the guarantees and governmental support that is enjoyed by official central bank-issued currencies.
The Value of Blockchain for Egypt's Banking Industry
Despite the country's overall attitude toward cryptocurrencies, the state-owned National Bank of Egypt (NBE) has signified an interest in the blockchain technologies that support them by joining the R3 blockchain initiative.
While the financial sector may not trust digital currencies, it's seeing a rapidly growing trend of blockchain adoption. Distributed ledgers and EDCCs offer benefits to infrastructures which are difficult for organizations to ignore. NBE's chairman, Hisham Okasha, described how the technology could impact service speed and costs for the banking industry, and went on to say:
"By joining the initiative together with world banks and companies we will be able to closely monitor and engage directly in global blockchain developments."
New York-based R3 now partners with hundreds of financial firms, technology innovators, and regulators across six continents in an effort to develop applications for finance and commerce on its blockchain platform – Corda.
The partnership between R3 and the NBE is indicative of Egypt's national digital transformation strategy, which includes exploring new, cutting-edge financial solutions.
As part of the partnership, the NBE can propose project ideas to the R3 consortium and collaborate with other global members. It will also gain the ability to train its IT talent on R3's blockchain platform and access established research.
In Egypt, blockchain partnerships are in their early stages, and it's yet to be seen how the country will apply them while it continues to develop laws relating to cryptocurrency trading and ownership.