The cryptographic paradox in the Middle East

With assistance from Derek Robertson

Programming note: Digital Future Daily will return to its regularly scheduled publication time (usually) 4:00 PM EST on Monday 11/21, before taking the next Thursday and Friday off for the Thanksgiving holiday.

ABU DHABI, UAE — At high-profile trade gatherings this week, government officials and CEOs here highlighted their unusually collaborative approach to regulating cryptocurrencies, which they hope will transform the wealthy emirate into a global hub for the legal use of technology.

Meanwhile, behind the scenes, tales were also circulated of “dark alleyways” in Dubai where foreigners – this year, many of them Russian – would carry bags full of cash to buy bitcoin anonymously to evade international sanctions, the kind of loophole that prompted Emirates to get global money laundering “greylist“in March.

The Middle East, the region where the use of cryptocurrencies is growing faster than anywhere else, is also the region that presents the clearest contrasts between cryptocurrency assets as anti-government money, and the growing desire of governments to use the underlying technology to modernize markets and monitor financial activity.

On the other hand, regulators in the Gulf states have been among the most eager to work with and attract crypto entrepreneurs, with a vision of integrating the technology into mainstream financial markets.

On the other hand, the Middle East is characterized by a high concentration of authoritarian regimes, rapidly inflating currencies and entities subject to sanctions – conditions ripe for the original use of cryptocurrency: to evade government control of funds.

According to a report It was released last month by analytics firm Chainalysis. This is thanks to both types of uses.

Bitcoin adoption is at an all-time high “It’s in the Middle East, but it’s very quiet because of the government’s harsh policies toward bitcoin,” said Fadi Elsalameen, a Palestinian anti-corruption activist and fellow at the American Security Project, a nonpartisan think tank in Washington. “It’s already here, it’s being used and it can’t be stopped.” Elsalameen said he began using bitcoin after the Palestinian Authority closed his bank account in response to his criticism of its leader, Mahmoud Abbas.

The unauthorized use of technology is popular in many other parts of the region.

Turkey, the country with worse inflation on the earth, Crypto payments prohibited last year, but it is still the largest cryptocurrency market in the region, according to a Chainalysis report. In Lebanon, where inflation is soaring and the banking system in tatters, it is technically illegal to accept cryptocurrency payments, but bitcoin and dollar-backed stablecoins are becoming increasingly popular. popular alternatives legitimate monetary system.

In Saudi Arabia, some women are secretly using bitcoin as an alternative to bank accounts, which are supervised by male relatives, according to Alex Gladstein, chief strategy officer at the Human Rights Foundation.

Despite this, there are signs The Saudi government is preparing to use blockchain technology after initially abandoning it. Meanwhile, its neighbors Abu Dhabi, Dubai and Bahrain have been doing their best to work with crypto companies and create regulatory frameworks that cater to the technology in recent years.

“These dictatorships in the Gulf have every reason to support cryptocurrency as long as they can control it.” Gladstein said.

This approach has been quite successful with crypto executives. Changpeng Zhao, the founder of the world’s largest crypto exchange, Binance, works out of Dubai and came here on Wednesday and Thursday to speak at Abu Dhabi Financial Week and the Milken Institute MENA Summit. Zhao, whose exchange is reportedly under investigation in the US for possible money laundering violations, mocked crypto-skeptic economist Nouriel Roubini’s suggestion that UAE authorities should expel him from the country. In fact, while he was here, the stock exchange obtained a new license from the FSA in Abu Dhabi.

Read the rest of the story on the homepage The site is here.

Don’t get angry, rape audited financial statements.

earlier this week, The Financial Times reported that as part of its deal to acquire a stake in SkyBridge Capital in September, Sam Bankman-Fried’s FTX forced fund manager to buy $10 million worth of the exchange’s home cryptocurrency, FTT.

SkyBridge founder and cryptocurrency bull Anthony Scaramucci declined to comment to the Financial Times, but via Milken Coffee Pot this morning, he told DFD that there are no hard feelings about the upset over now worthless tokens. “I’m a big boy,” he said. “I am not angry.”

For the future of the industry, Scaramucci is committed to encryption party line on collapse. “If anything, it made me more Confident,” he said, “because I think he’ll knock out some weaker bastards.” “

(And on the future of the United States, the former White House communications director has vowed to oppose former President Donald Trump if his old boss wins the Republican nomination, saying he puts “democracy over politics”).

Elon Musk problem #99 for today (at least): Europe’s biggest Twitter regulator is letting him know the quick and loose political changes he’s already made to his new game.

As Politico’s Nicholas Vinocour and Vincent Manancourt reported todayIrish Chief of Data Protection Helen Dixon, who oversees Twitter’s European operations, has expressed concerns about the new system and in particular Musk’s plans to revamp the platform’s verification regime. Dixon tells Nicholas and Vincent that her office is “proactively engaged [with Twitter] And he asks, “Look, there are a lot of reports about changes to verified accounts, blue ticks, and phishing accounts. What risk assessments are being done and what are the implications for European users?”

As if that weren’t enough, Dixon’s office is also concerned with mass defections from the company — namely when it comes to security, where “we of course read that the chief security officer was gone,” she said. In America, issues like this are likely to enrage creditors as advertisers flee the platform (not to mention angry users). In Europe, as Nicholas and Vincent point out, Musk could be on the hook for more than $1 billion for violating an EU agreement. Data protection and privacy law. – Derek Robertson

If this big meta metaverse project is going to succeed, The company needs people to enjoy spending time there. So the company has been very vocal about how seriously it takes moderation, rolling out a series of policies that moderate both Procedure And the Contentespecially given Facebook’s long and rocky moderation history — but according to security researchers at the University of California, Berkeley, the company still has a long way to go.

In a report entitled “A Safe and Equitable Metaverse: Designing Effective Community Guidelines for Social Virtual RealityRafi Lazerson of UC Berkeley’s Center for Long-Term Cybersecurity is on the road testing Meta community standards and moderation policies across their 2D and 3D platforms. The short bottom line: To make users feel safe and secure in the latter world, the company has a long way to go to even match the ambitious baseline in place. Some key points:

  • Three different sets of Community Guidelines may currently apply in the Meta VR spaces, with a high degree of ambiguity as to when and where each takes effect.
  • Said policies do not yet address the barrier security researchers have identified to clarity or comprehensiveness, such as determining whether Nazi salutes in virtual reality are prohibited, the report asks.
  • Meta needs to make its rules more transparent, by recording and explaining its edits, similar to Wikipedia. – Derek Robertson

Stay in touch with the whole team: Ben Schrekinger ([email protected]); Derek Robertson ([email protected]); Steve Houser ([email protected]); And the Benton Ives ([email protected]). Follow us @tweet on Twitter.

Ben Schreckinger covers technology, finance, and politics for POLITICO; He is an investor in cryptocurrencies.

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