Abdullah wakes up to find out that the Qatar government has decided to ban all kinds of cryptocurrencies in their country. The Qatar Financial Center (QFC) has announced the banning of all cryptocurrency-related trades and services. This news was surprising for Abdullah as Qatar is a leader in adopting to blockchain-related trade. The financial regulators in Qatar have come to this decision in an attempt to combat virtual currencies that finance terrorisim.
Sheikh Abdulla bin Saoud Al-Thani, the governor of Qatar's Central Bank, said, " The state of Qatar affirms that fighting money laundering and terrorist financing requires a strict and effective regulatory and legislative framework, whereby the powers and responsibilities of both government agencies and relevant ministries are defined concerning combating money laundering and terrorist financing."
Qatar is not the first country to ban the use of cryptocurrencies; a number of other countries have already prohibited cryptocurrencies from fighting the illicit use of cryptocurrencies. Qatar's ban includes crypto to crypto trade and crypto to fiat exchange, trading, custody and financial services based on virtual assets.
As Abdullah was planning on investing in cryptocurrencies in the future, he decided to read more about it. Interestingly, he found out that this ban does not ban the use of Security Tokens. Security Tokens are unaffected by the new regulations as these Tokens undergo AML (Anti Money Laundering) and KYC (Know Your Customer) verification.
Security Token Offerings or STOs are seen as investment contracts, through which an investor can anticipate profits, shares or dividends in the future, from a company. STOs are different from other forms of cryptocurrencies and blockchains, with the main difference between Security Tokens and Utility Coins (e.g. Bitcoin) being the strict regulations regarding the purchase if STOs and their transference.
Abdullah was planning on investing; many investors prefer STOs because they adhere to SCE's legal restrictions. Investment through STOs is more transparent as the companies that offer STOs must provide all the crucial information like the location of the company, financial statements, business purposes and management. These details make a massive difference between the usage of STOs and Utility tokens as the latter doesn't need any such information, leading to providers giving falsified information. This is the reason why various countries have decided to ban the trade of cryptocurrencies. There are some pro cryptocurrency countries like Germany that have been welcoming to the use of trade tokens and have decided to not participate in any of the policies that ban the use of them. Even though there are countries that ban the use of cryptocurrencies, most of them have not prohibited the use of Security Tokens. This is due to the security regulations that govern the use of them.
Usually, The Howie Test is used to determine if a coin is a security token or a utility token.
1. Are you investing money?
2. Do you expect profits in return for the investment?
3. Are you investing in a common enterprise?
4. Will your profits come from the efforts of the promoter or the third-party?
If yes is the answer to all the above questions, then it falls under STOs.
Even though Security Tokens are the safest way to invest using cryptocurrency, they still have some disadvantages such as reduced liquidity and limited transference options due to strict regulations. Comparing all the popular forms of cryptocurrencies and blockchains, STO is the most secure and widely accepted cryptocurrency.
Companies that use STOs can still be fully functional in Qatar without any problems. The added transparency and stability will attract more large scale investors.If you want the help of regulated professionals to help you with investing in diverse companies and guide you through the process, contact us at +974 40120333 or send us a mail at email@example.com Looking forward to hearing from you!