‘Gulf will lead digital currency world’

Saudi Arabia and UAE embrace blockchain despite a crash in coin prices. (AFP)
Updated 23 March 2019

‘Gulf will lead digital currency world’

  • Saudi Arabia and the UAE have agreed to pilot a shared digital currency for cross-border bank transactions
  • Bitcoin prices have plummeted by more than 50 percent in the last year

LONDON: The Gulf is overtaking Asia as the global leader in cryptocurrencies, as countries such as Saudi Arabia and the UAE embrace blockchain technology despite the crash in coin prices, according to the cofounders of a new digital-currency exchange.
Bitcoin prices have plummeted by more than 50 percent in the last year, from a high of $9,683.54 on May 4, 2018 to under $4,000 on Thursday afternoon. Ethereum, another prominent digital currency, lost 83 percent of its value over the same period.
That has not deterred the founders of the Abu Dhabi-based Hayvn, who believe digital currencies are still in their infancy and are yet to benefit from big bucks being pumped in by institutional investors. A move by Saudi Arabia and the UAE to pilot a shared digital currency for cross-border bank transactions also points to the longer-term potential of cryptocurrencies, said Hayvn cofounders Ahmed Ismail and Christopher Flinos.
“We see the Gulf leading digital currencies going forward, globally,” said Flinos. “It started in Asia, and we now see the GCC taking over from Asia as the global leader in digital currencies and their integration into the financial system.”
Flinos said there was an appetite for cryptocurrencies among big regional investors, but that they lack a safe and secure platform on which to trade. 
“Saudi Arabia is one of the biggest cryptocurrency markets, potentially, within the region,” he said. “Middle Eastern high-net-worth individuals generally have a higher risk tolerance … they like equities, they are used to volatility. They’re not afraid of new things, they’re not afraid of chasing yield.”
Flinos and business partner Ismail, who met while working at Merrill Lynch in the mid 2000s, plan to launch Hayvn soon and have had discussions with the Abu Dhabi Global Market (ADGM) authority about regulating the platform. The executives say that regulation, along with cryptographic security provided by a company called nCipher, will make Hayvn stand out from other global exchanges, some of which have been hit by high-profile cyberattacks. The Tokyo-based Mt. Gox exchange, notably, filed for bankruptcy in 2014 after losing some 850,000 bitcoins — then worth about $500 million — and $28 million in cash from its bank accounts.

 

The Hayvn exchange will be aimed at institutional investors with more than $500,000 of investable funds, such as hedge funds, private banks and high-net-worth individuals. Its founders have not yet disclosed which cryptocurrencies it will trade, but confirmed the majors will be there. They have also held initial discussions about being an exchange for “intra-GCC trading coins” of the sort being piloted by Saudi Arabia and the UAE.
Despite the roller-coaster ride in crypto prices, Hayvn cofounder Ismail said that there is a gap in the market for a well-regulated and secure exchange. 
“Cryptocurrency exchanges right now, globally, are effectively just casinos,” he said. “We saw that (in) a lot of the exchanges around the world, it was pretty much the Wild West … there was a lot of price manipulation, there was a lot of money laundering, institutional money was still not convinced.
“We saw what was going on in the digital currency market. And we saw this massive gaping hole.” 
Ismail described the ADGM’s regulatory framework as “rigorous” and said the planned security on the trading platform means it is “completely unhackable.”
“We’re not simply an exchange — retail exchanges are a dime a dozen, it’s very easy to set one up,” he said, pointing to the research the company plans to conduct with a London-based university.
Ismail acknowledged the crash in prices of bitcoin and ethereum, but said that it was still early days for cryptocurrencies, which until now have been traded mainly by small individual investors. 
“The reason there has been massive amounts of volatility in (bitcoin) or ethereum or any of the large coins is the fact that it’s been pretty much retail (investors),” he said. “Institutional money is still waiting on the sidelines to get into cryptocurrency. It’s moving. There are paradigm shifts that are happening right now in the whole cryptocurrency world. But it’s still not there yet. We’re still at the very very beginning of the digital currency revolution.” 
So will cryptocurrency prices recover in the short term?
“Who knows? It may be overvalued, it may be undervalued,” said Ismail. 
“We ultimately don’t care. We’re looking at this as a real asset class that has long-term probability. It might not be bitcoin, it might be another cryptocurrency that’s going to emerge in the short to medium term.”

FASTFACTS

Bitcoin prices have lost about half their value over the past year.


Japan, South Korea hold export talks, seek dispute solution

Updated 16 December 2019

Japan, South Korea hold export talks, seek dispute solution

  • Japan in July tightened trade controls on South Korea materials used in high-tech products
  • Tokyo also downgraded Seoul a month later from a list of preferential trade partners

TOKYO: Senior officials from Japan and South Korea were holding talks Monday on high-tech exports for the first time since Tokyo tightened controls on South Korean semiconductor parts earlier this year.
The director-general level meeting was taking place in Tokyo between Yoichi Iida of Japan’s Trade Control Department and his South Korean counterpart, Lee Ho-hyeon. The two officials shook hands at the beginning of the talks, though they made no opening remarks to the media.
A meeting of this level had not been held in more than three years.
Japan in July tightened trade controls on South Korea materials used in smartphones, television screens and other high-tech products, citing national security concerns. Japan also downgraded South Korea a month later from a list of preferential trade partners.
South Korea has demanded Japan reverse the measures, saying Tokyo has weaponized export controls in retaliation for South Korean court rulings demanding Japanese companies pay compensation to former Korean laborers over their treatment during Japan’s 1910-1945 colonial rule of the Korean Peninsula. Tokyo has pressed Seoul to stick with a 1965 agreement in resolving their dispute over wartime Korean laborers, criticizing the court decisions a violation to international law.
Japan’s trade curbs against South Korea have led to subsequent retaliatory measures that spilled into the area of national security, with Seoul threatening to abandon a key military intelligence sharing pact with Tokyo.
The pact was saved just hours before its expiration in November, following Washington’s repeated pressure and with Tokyo agreeing to resume export control talks requested by Seoul.
Monday’s talks come a week ahead of a planned summit between the two countries and China.
Japanese and South Korean foreign ministers, Toshimitsu Motegi and Kan Geun-wha, both attending the Asia-Europe Meeting in Madrid, Spain, talked briefly and welcomed their trade officials’ meeting in Tokyo, Japanese officials said. The two sides also agreed to cooperate closely on threats from North Korea and to achieve next week’s summit.
Chief Cabinet Secretary Yoshihide Suga said that Japan’s export control measures are part of the country’s international responsibility and that “they are not something that we decide by negotiating with a trade partner.”
“Our policy has been consistent and there is no change to our position,” Suga said, referring to Japan’s position on the wartime compensation issue. “We urge South Korea to act wisely.”
South Korean national assembly speaker Moon Hee-san is seeking to set up a compensation fund for the Korean wartime laborers with an option that allows Japanese companies to chip in donations as a compromise.