After Blockchain Push, UAE Investigates Ripple (XRP) and a national cryptocurrency

A major payment provider in the United Arab Emirates (UAE) is implementing blockchain-based systems to manage remittance facilities, while the government of the country is discussing the creation of a state-supported cryptocurrency in collaboration with Saudi Arabia, according to two reports of the week of December 11, 2018.

RippleNet technology to implement

Continuing its strong onboarding performance in the Middle East and Asia, the American startup Ripple signed an agreement with Abu Dhabi UAE exchange to launch cross-border remittances through the first level of business RippleNet blockchain, like reported of Reuters.

Asia receives over $ 613 billion annually in remittances, with a large share coming from expatriate workers in the Middle East. This last region is dominated by exchange companies and payments Finablr, a local branch of the United Arab Emirates stock exchange. While most of the funds are currently being sent through branches of foreign currency, websites and mobile apps, the company intends to implement blockchain technology to guarantee a safer, faster and safer payment process.

The United Arab Emirates expect to enter live with Ripple as early as the first quarter of 2019, "with one or two Asian banks" are expected to begin accepting blockchain remittances.

RippleNet has more than a hundred partner banks and financial institutions, which enable messaging, payments, clearing of securities and rapid settlement of transactions between all members. The most important institutions include credit institutions National Bank of Ras Al Khaimah, Kuwait Finance Houseand the local arm of the global bank Standard Chartered.

CBDC for cross-border payments

In another development, the Central Bank of the United Arab Emirates is undertaking a joint project with the Saudi monetary authority to issue a blockchain-based digital currency to enable rapid transactions between the two borders reported Gulf Times.

Managing Director of Emirates Investment Authority, Mubarak Rashed At Mansouri, spoke about the development:

"This is probably the first time ever to witness the cooperation of the monetary authorities of different countries on this subject and we hope that this result will foster similar collaboration in our region".

However, Al Mansouri was quick to note that the proposal exists in its research and study phases, with both parties still having to delve into the concept. The study is presumably developed by a large group of officials and researchers, with no information on the final group that led the project and the total costs associated with the project available at the time of writing.

Al Mansouri added that the digital currency will be strictly available for use between the banks of the two countries, stating, "this would be more efficient … This is between us and the banks".

Both central banks of the United Arab Emirates and Saudi Arabia have called bitcoin and other cryptocurrencies earlier, condemning the volatility and price risks of pioneering cryptocurrency. However, the narrative could change if officials were to understand blockchain technology and its myriad of benefits.

Al Mansouri also noted that essential developments in the fintech sector present both a unique opportunity and a challenge to understand the risks involved. Both industry players and market participants must work together to determine the best way to mitigate risks and improve the industry.