The State of Crypto Regulation: Egypt

Egypt warns against cryptocurrencies, citing risks and potential legal consequences.

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Umoja Protocol

5 min readJul 11, 2023

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The Regulatory TLDR

Policy & Regulation Status: Nascent Regulatory Environment, with Blockchain Regulatory Assessment Score of 28.50/100.
Number of Cryptocurrency Owners: ~3.32M (~3% of Country)
Summary: Regulators embrace the potential of blockchain technology but very critical of cryptocurrency secondary markets and crypto exchanges.

The Egyptian Crypto Ecosystem

Overall, there are an estimated 3.32 million cryptocurrency owners in Egypt, representing approximately 3% of the country’s populations. On Umoja Lab’s BRAF (Blockchain Regulatory Assessment Framework), Rwanda is rated a 28.50 out of 100, indicating that it is a “Nascent Regulatory Environment” that needs much more clarification as to the legality of cryptocurrency and how Web3 companies may remain compliant.

A Regulatory Overview

In Egypt, the legal status of cryptocurrency has undergone notable developments. In 2018, a religious decree from the primary Islamic legislator in Egypt categorized commercial transactions involving bitcoin as haram, or prohibited under Islamic law. The Central Bank of Egypt also cautioned against trading cryptocurrencies due to the associated high risks. However, in 2019, the Central Bank announced its intention to draft a law that would solely prohibit the creation, trading, or promotion of cryptocurrencies without a license. Subsequently, in 2020, the Egyptian Parliament enacted the Central Bank and Banking Sector Law, which introduced definitions, licensing guidelines for digital banks, and provisions pertaining to cryptocurrency.

Taking a Deeper Dive

In Egypt, the legal status of cryptocurrency has undergone significant developments. While religious decrees and warnings against trading cryptocurrencies have been issued, the enactment of the Central Bank and Banking Sector Law indicates a growing recognition of the potential benefits and significance of digital currencies. This law establishes a regulatory framework for cryptocurrency firms, aiming to safeguard consumers and maintain financial system stability.

Globally, the legal landscape for cryptocurrencies is still evolving, with many jurisdictions yet to establish specific laws governing their use. The legality of cryptocurrency mining remains uncertain in several countries. However, some countries have explicitly banned cryptocurrency-related activities, while others have adopted more favorable regulations. For instance, Israel treats crypto mining as a taxable business, while Canada and the United States maintain a relatively positive stance toward crypto mining.

The Central Bank of Egypt has recently reissued a warning emphasizing the associated risks of cryptocurrencies and reiterating the prohibition on their use within the country. The warning underscores concerns related to national security, the stability of financial systems, and the potential for funding terrorism and illicit activities.

This warning aligns with the central bank’s previous stance on cryptocurrencies, cautioning against engaging with cryptocurrencies through individuals, companies, applications, or digital platforms. The bank stresses that no licenses have been granted for cryptocurrency trading in the Egyptian market.

The warning from the Central Bank of Egypt carries legal implications for violators of the cryptocurrency prohibition. Offenders may face imprisonment and fines ranging from one to ten million pounds. These stringent penalties reflect the bank’s commitment to enforcing the prohibition and deterring individuals and businesses from participating in cryptocurrency-related activities.

The Central Bank of Egypt’s warning reflects a broader trend of regulatory scrutiny and cautious approaches to cryptocurrencies worldwide. Numerous central banks and regulatory authorities have expressed concerns regarding risks such as money laundering, terrorist financing, and consumer protection. Some countries have outright banned cryptocurrencies, while others have implemented regulations to mitigate associated risks.

Emerging Trends & Themes

One recurring trend observed across the articles is the growing interest and adoption of cryptocurrencies and blockchain technology in the Middle East and North Africa (MENA) region. Countries like the United Arab Emirates (UAE) and Saudi Arabia have taken a more permissive approach to cryptocurrencies, with the UAE establishing the Global Blockchain Council and making cryptocurrency transactions tax-free. This trend reflects the region’s recognition of the potential benefits of digital currencies and blockchain technology in driving innovation and economic growth.

Forecasts for the Crypto Regulatory Future

The discussed news items have implications for the regulatory environment for blockchain and cryptocurrency. In Egypt, the lifting of the ban on cryptocurrencies and the enactment of the Central Bank and Banking Sector Law demonstrate a growing recognition of the potential benefits and importance of digital currencies. However, the regulatory framework for cryptocurrencies is still evolving, and it remains to be seen how regulations will be implemented and enforced.

The future of cryptocurrency, decentralized finance, and blockchain technology will depend on the regulatory environment and the ability of businesses and consumers to navigate the evolving landscape. The regulatory challenges and opportunities will shape the development and adoption of these technologies, with implications for financial systems, economic growth, and innovation. It is likely that regulations will become more stringent as governments and regulatory authorities seek to mitigate risks and protect consumers, but there may also be opportunities for favorable regulations and incentives to support blockchain and cryptocurrency startups and projects.

About the Author

Robby Greenfield has over a decade of experience in blockchain and financial engineering. He has served as an industry leader in deploying decentralized applications in emerging markets, such as Sub-Saharan Africa, the Asia Pacific, and LATAM. Robby has worked with renowned blockchain firm ConsenSys, co-deploying innovative solutions and collaborating with organizations like the U.S. State Department, the World Bank, the UNOPS, Oxfam International, and Care International. Currently, he is the CEO of Umoja Labs, a Coinbase and Mercy Corps-backed Web3 fintech providing payments and credit infrastructure across Sub-Saharan Africa.