EGYPT Law and Practice Contributed by: Dina Kamel, Helal El Hossary, Omar Fouda and Kareem Hashem, Zaki Hashem
These are relied on as a practical way to evidence compliance with statutory obligations around security, lawful processing and safe operations. The regulator, whether the CBE or the FRA, imposes operational requirements, including technology tool requirements, on licensed entities. These entities must adhere to such requirements in their contracts with the service provider. 10. Blockchain 10.1 Use of Blockchain in the Financial Services Industry In Egypt, the use of blockchain by traditional finan - cial institutions is not illegal per se and is typically framed as a back-end technology option (eg, for inter - nal recordkeeping, reconciliation, controlled pilots or back-end tokenisation) rather than a public crypto activity. The key distinction is that the issuance, trad - ing or promotion of “virtual currencies” is statutorily restricted without CBE approval, so institutions cannot provide retail-facing crypto rails and related products. Instead, they can focus on institutionally governed, permissioned implementations given that no outright prohibition exists on the use of blockchain technology. 10.2 Local Regulators’ Approach to Blockchain The regulators’ approach to blockchain is cautious. If blockchain is used to perform or support a regulated financial activity, existing sector rules apply. Block - chain is generally treated as a technology option rather than as a standalone regulated category. The key factor is whether the use case invokes virtual cur - rencies, which remain statutorily restricted, without CBE approval. Thus, market practice tends towards non-crypto enterprise implementations and controlled pilots, rather than public crypto use (governed by the Central Bank and Banking System Law, Article 206). 10.3 Classification of Blockchain Assets As per 10.2 Local Regulators’ Approach to Block- chain , there is no framework that directly regulates or classifies blockchain assets. Not all blockchain assets are automatically regulated financial instruments in Egypt. The classification (if any) follows strict rules –
if the token represents or functions like a security (eg, share, bond, fund or interest), capital markets rules can apply regardless of the “token” label. By contrast, if the asset is a “virtual currency” used as a medium of exchange or store of value, it is subject to the Central Bank and Banking System Law unless CBE approval is obtained (governed by the Capital Markets Law; Ministerial Decree No 135 of 1993; and the Central Bank and Banking System Law, Article 206). 10.4 Regulation of “Issuers” of Blockchain Assets As per 10.2 Local Regulators’ Approach to Block- chain , there is no framework that directly regulates or classifies blockchain assets or issuers. The tokenisa - tion of real-world assets also raises concern – even if a blockchain record is operationally robust, “legal title” and enforceability still depend on the applicable underlying asset transfer formalities (subject to the form and sector-specific requirements and regula - tions) and the regulator’s satisfaction with respect to custody, auditability and investor protection. In short, tokenisation may be technically feasible, but the enforceable regulations are what determines whether it can be offered to the public within Egypt’s regulated markets. 10.5 Regulation of Blockchain Asset Trading Platforms As per 10.2 Local Regulators’ Approach to Block- chain , blockchain is treated as a technology, but where a platform use case involves cryptocurrencies, the Central Bank and Banking System Law (Article 206) applies: the issuance, trading or promotion of cryptocurrencies is prohibited without a CBE board licence. For blockchain-based instruments that qualify as securities, secondary trading would need to be in accordance with the capital markets regime under FRA supervision, with appropriately licensed interme - diaries and trading venues. Furthermore, peer-to-peer trading or lending is not permissible in Egypt, regard - less of what asset is traded. 10.6 Staking There are no laws regulating the staking of crypto - currencies in Egypt. Without explicit approval or a
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