According to a report released by CoinSchedule, UAE is the largest contributor to crypto token sales, this year – being ahead of the US and the UK. Since the beginning of 2019, over 25% of funds raised (equal to $210.5 million) have come from the UAE.
UAE is aiming to become a leading destination for blockchain-based businesses by developing new crypto legislation. On the smart cities end, the emirates of the country, particularly Dubai is working on implementing the Blockchain technology in public transactions, an attempt towards the paperless economy.
Hence, being one of the role players in the Middle East region, UAE along with the Kingdom of Saudi Arabia (KSA) that is unveiling its existence beyond the oil-based ecosystem are collaborating to create a cryptocurrency that facilitates cross-border transactions between the two nations. A detailed account of the initiative is explained ahead.
Saudi Arabia, UAE And The Blockchain Technology (2018-19)
February 2018 – The Saudi Arabian Monetary Authority and the Central Bank of Saudi Arabia came to terms with Ripple, a San Francisco-based technology firm to help banks in the KSA improve their payments infrastructure. Ripple delivered a software solution called ‘xCurrent’ that enables banks to establish cross-border payments with end-to-end tracking.
May 2018 – The Saudi Ministry of Communication and Information Technology collaborated with ConsenSys, an American-based firm that develops Ethereum-powered software solutions. The partnership initiated a “Blockchain Bootcamp” to promote technological headway and the initiative, in particular.
26 December 2018 – The Saudi Customs authorities declared the completion of a pilot project that associated its cross-border trade platform ‘FASAH’ with Maersk’s and IBM’s TradeLens Blockchain platform. The TradeLens platform is integrated into supply chain management and efficiency.
20 January 2019 – The Executive Committee of the Saudi-Emirati Coordination Council concluded its maiden meeting in Abu Dhabi in which they discussed strategic issues for regional development in social, economic and military areas. The committee announced a pilot project for the creation of a cryptocurrency for banking institutions in KSA and UAE. The council of 16 members from both the countries was headed by Mohammed bin Mazyad Altwaijri, Minister of Economy and Planning, on behalf of KSA and Mohammad bin Abdullah Al Gergawi, Minister of Cabinet Affairs and The Future, on behalf of the UAE.
Experiment With Blockchain
After the meeting held this year in January, the partnership between KSA and UAE resulted in an initiative to experiment with blockchain technologies in order to enable financial operations between both the nations more efficiently – through the creation of a new digital currency.
The joint initiative aims at targeting the new digital currency for banks on a trial basis. In this experiment, the two nations will understand the implications of the Blockchain technology and how it facilitates cross-border payments. The virtual currency will depend on the use of distributed database between the central banks and other participating banks from both countries. More comprehensively, the project will focus on protecting customer interests, establish technology standards and assess cybersecurity risks. It will also examine the impact of a central currency on monetary policies.
The blockchain will be managed as a centralised platform and kept private to prevent the general public from potential access to any information. So being a centralised system, it is anticipated that it will be designed to allow reversal of transactions in case the central banks require it. This will be opposite to the conventional blockchain technology which retains the performed transactions permanently and does not allow any changes to it.
Currently, the date for the commencement of the experiment has not yet announced. Nevertheless, some advancements are sure to be happening as the central financial institutions are familiar with the Blockchain technologies created by Ripple, IBM and ConsenSys.
In 2018, a cross-border pilot was launched using the Indian rupee. The currency was activated in Saudi Arabia British Bank (SABB). According to Majed Najm, Deputy Managing Director of Corporate and Institutional Banking at SABB, “The Indian rupee (INR) is a positive start to an upcoming roadmap being the first currency to be activated in SABB.”
He further said that the objective is to deliver valuable service to the customers and connect more currencies and countries in the coming times.
Joint Venture For Smart Cities And Beyond
Saudi Advanced Technologies (SAT), and WISeKey International Holding, cybersecurity, IoT and Blockchain group of companies have jointly ventured into extending the WISeKey’s solution across the Middle East. As a result, the allies are working on setting a limited liability company in KSA named as WISeKey Arabia.
Saudi Advanced Technologies is a company entirely owned by EA Juffali & Brother which is responsible for establishing the electric power supply and telecommunications in some of the major cities of Saudi Arabia.
The new company has an all-embracing goal to establish a market beachhead with credible leaders in the country to maximise near-term revenue and simultaneously generate meaningful market opportunities in areas including smart cities, retail, finance, automobile, healthcare, smart cards, IT infrastructure, transportation, and industries.
Furthermore, WISeKey Arabia revealed that it will run Blockchain Centres of Excellence (BCoEs) linking to a network of BCoEs in Buenos Aires, Canada, China, India, Malaysia, Mauritius and Rwanda.
All the centres will be interconnected through three hubs, namely Beijing, Geneva and Toronto, also termed as a “trust triangle” which will work under a mutual trust protocol. In other words, the triangle will operate by using WISeKey’s public key infrastructure (PKI) blockchain technology, maintain the core blockchain values of transparency, traceability and auditability and focus on bringing trust and security.
According to WISeKey, its integrated PKI solution is equivalent to any blockchain platform, where it can help with developing a more trusted model for use inside a distributed system and produce a universal trust protocol for the Internet 2.
The business model of the Geneva BCoE focuses on supporting local blockchain startups and research to promote their technologies on the global level while aiding rapid adaptation and on-boarding of blockchain-based solutions, as per WISeKey. Moreover, it is intended for stronger collaboration between the public, private and academic sectors while making sure that the latest technological standards serve everyone in a safe and reliable way.
Besides, the Saudi BCoE will align with other centres around the globe. This will ensure that all the partners get full advantage from experiences and resources that are shared. Each BCoE is supposed to create expertise independently and share it with all the centres.
For instance, the Buenos Aires BCoE will lead the development of platforms to combat illegal trade, counterfeiting and corruption. On the other side, Geneva BCoE will work in the Fintech space to develop applications for digital private banking and commodity trading.
In association with SAT, WISeKey has explored and secured other synergistic cooperation with leading companies in Saudi Arabia whose values and product portfolio is in line with their mission.
Juffali group of companies, largest business house in KSA is one of the firms that will receive an end-to-end solution from the joint venture.
Both WISeKey and SAT are working together to develop a root of trust (RoT) and PKI in Saudi Arabia. PKI is a system that provides security that is vital for digital transactions.
The way Saudi Arabia is spearheading the introduction and expansion of blockchain technology in the region, it is most likely that it will place itself in a position to be a leader in the Middle East region.