The Advisory Council of the United Arab Emirates Banks Federation (UBF) discussed applying blockchain in its member banks, according to the Dubai-based English language newspaper Gulf News on Dec. 17.

The Advisory Council of UBF, a non-profit organization representing 50 member banks in the country, considered using blockchain to improve Know Your Customer (KYC) processes at entrant banks. UBF’s chairman, Abdul Aziz Al Ghurair, claimed that the discussed initiative represents an effort to create and maintain a “thriving banking ecosystem.”

Participants also discussed issues pertaining to the country’s national digital transformation program and Emiratization — a government employment initiative to place its citizens in roles in the public and private sectors.

Aref Al Ramli, chairperson of UBF’s Digital Banking Committee, presented a blockchain-based study that explores the benefits of digitizing various processes within member banks via distributed ledger technology (DLT). The study has outlined a number of blockchain applications by banking institutions, including cross-border payments, compliance reporting, customer onboarding, and others.

Al Ghurair said that emerging technologies are “continuing to shape customer needs and expectations,” putting banking industry participants “at the forefront of innovations.” He also claimed that new technologies like blockchain can assist banks in creating new revenue streams, “which will in turn drive sustained business growth.”

In late November, the governmental AI and Blockchain Joint Working Group hosted an annual meeting that concluded with the launch of two initiatives intending to boost blockchain and artificial intelligence (AI) development. At the meeting, participants considered strategies to attract foreign investments and build a necessary infrastructure by using AI and blockchain.

Also in November, Abu Dhabi-based Al Hilal Bank announced it completed “the world’s first sukuk transaction” based on blockchain technology. Sukuk, a legal tool that is known as “sharia compliant” bonds, allows investors to generate returns in compliance with Islamic law.

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Despite the recent slump the crypto market has experienced, industry analysts believe that digital currencies such as bitcoin, have the potential to be aggressively embraced by local investors in the next financial cycle, the Malaysian Reserve reported on November 21, 2018.

Malaysian Investors Shouldn’t Be Quick to Dismiss Cryptocurrencies Just yet

The downturn the crypto market has taken during the second half of November 2018 has definitely attributed to the negative sentiment towards the industry. However, despite the fact that investing in crypto might have lost its charm for many novice traders, it would be a mistake to write off digital currencies just yet.

Many industry analysts believe that cryptocurrencies, especially bitcoin, are going to be embraced by investors within the next financial cycle, as both large and small players are eagerly waiting for more government regulation.

According to a Malaysian Reserve report, this seems to be the case in Malaysia, where the majority of industry players remain calm over the recent bitcoin dive, describing this move as a mere transition phase.

However, Aaron Ting, the vice president of Malaysia Investors’ Association, acknowledged that unstable prices did hamper the cryptocurrency market this year. He explained that what we have seen towards the end of 2018 was the market’s peak, while 2019 will be its decline, which leads to a period called the “trough of disillusion.”

I believe we are in the middle of this period and it will recover from here eventually, before experiencing a slower ascent,” Ting said, using the Gartner Hype Chart Cycle, to gauge the movement of digital coins.


The Ups and Downs of the Crypto Market Are Nothing New

Ting, who is also the secretary of Access Blockchain Association Malaysia, said that the changing phases are nothing new, adding that every new technology in the past few decades has experienced the same ups and downs. What is different, though, is the speed at which the phases come and go.

In today’s world, due to the Internet and social media, the hype chart cycle tends to be compressed,” he told the Malaysian Reserve.

He cited the example of 3D printing, saying that despite the fact that the technology was introduced decades ago, it took until recent years for it to be widely adopted.

The rapid development of crypto and blockchain technologies indicates that the industry is still in its early, prolific days, and it seems that the country of Malaysia has made sure it had opportunities for it open.

Ting said the government’s step to regulate cryptocurrency may result in more industry players to venture in the market. In order to achieve that, the Malaysia Digital Economy Corp is currently looking at Singapore when it comes to initiatives involving cryptocurrency.

He believes it is the right time for the distributed ledger technology to be adopted by Malaysia, replacing the currently what he described as “outdated” financial systems that lack both transparency and efficiency.

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The Republic of the Marshall Islands will move forward with its plan to introduce its own cryptocurrency, despite a vote of no confidence against President Hilda Heine’s support of the venture, according to reports on Tuesday.

A ‘Sovereign’ Crypto Nation

The Pacific Island nation intends to introduce a cryptocurrency called the Sovereign (SOV), to be used as a form of legal tender alongside the U.S. dollar, according to the Independent. The plan led eight senators of the Marshallese government to accuse President Heine of damaging their country’s image by advocating for the cryptocurrency and called for a vote of no confidence against her. Heine survived it by one vote.

The country’s Finance Minister Brenson S. Wase confirmed the decision to move forward with the proposal, according to the Nikkei Asian Review. The publication added that concerns over the plan being backed by China motivated the vote against Heine, as support from the Chinese government may be interpreted as undermining Marshallese authority.

The government aims to take the ICO route to fund the new currency, pursuing half the money necessary to get it off the ground from foreign investors. Once the goal is reached, the remainder will reportedly either be kept in a government trust or distributed to the country’s citizens.

Already Approved as Legal Tender

Minister-in-assistance to President Heine, David Paul, says the SOV’s status as legal tender equal to the U.S. dollar has already been approved, paving the way for its regulation. An official statement from the Marshallese government reads:

“This creates legal certainty for its use, because all jurisdictions have laws in place for dealing with legal tender, whereas private cryptocurrencies are dealt with differently in different jurisdictions.”

Despite the potential risks of issuing the SOV, which include the loss of the Marshall Islands’ correspondent banking relationship (CBR) with the dollar according to the IMF, the Marshallese government does appear to be taking the correct steps to deal with such liabilities. A recent report by the IMF that advised against the issuance of a government crypto stated:

“They have created a high-ranking committee to examine all the risks, including those raised by the IMF and the US Treasury, and those discussed during the public hearings on the legislation.”

Israeli startup Neema reportedly convinced the Marshallese government it could profit from introducing its own cryptocurrency, spurring the SOV’s development. The official website of the currency distinguishes it to be more digital fiat than crypto, asserting it will meet the highest regulatory standards for money. The site claims the currency will serve as a bridge between fiat and cryptocurrencies while opening up new opportunities for smart contracts and financial products written on-blockchain.

The SOV will allegedly get around money laundering concerns via built-in know your customer (KYC) technology called the Yoke Protocol only allowing transfers between wallets that have been identified with a token. The protocol will also allow users to establish that transferred funds are from verified users.

Twenty-four million units of the currency will be minted at launch, with an annual four percent projected growth rate, according to the RMI’s Sovereign Currency Act. Following the launch and completion of the ICO, vendors, and citizens will be able to conduct business with the SOV via an app.

The IMF’s report states that the issuance of the SOV is likely still a few years away, as it must first comply with Financial Action Task Force (FATF) regulations and the U.S. government must also approve the SOV’s use in transactions within the U.S. financial system.

This post is credited to cryptoslate