The reason banks are apprehensive when it comes to cryptocurrencies is because the tokens are ‘not actually currencies,’ according to JadoPado founder Omar Kassim, who is launching Dubai-based crypto exchange and OTC market BitPado.com.
Speaking to Arabian Business, Kassim said the ‘cryptocurrencies’ are instead more like commodities.
“They have some aspects of currencies for sure, but if you look at traditional properties of a currency, such as store value and being issued by an essential government, then cryptocurrencies don’t meet that bar. Yet people are starting to treat them that way,” he said.
Kassim said the tokens are not currencies because they have not been identified as such by regulators, creating further challenges in the space.
However, the tokens do not have traditional properties of commodities as they are not restricted to a venue and can be moved around in an easier manner.
“Regulators don’t know how to treat them and banks are apprehensive about jumping into the space wholeheartedly, especially given the challenges they had in the last five to seven years in terms of penalties and in various jurisdictions,” he said.
Another issue is the volatility attached to the tokens, which makes it difficult to convince the general public to invest in them.
“It’s very difficult to convince the man on the street by saying, ‘Hold it in your wallet and when you get to whatever you’re transacting in', suddenly you’ve got 10 percent more or 10 percent less,” Kassim said.
While the tokens are not practical yet, they are “definitely an alternative to a centrally issued currency,” he said.
The entrepreneur, whose online market place JadoPado was acquired by Emaar’s e-commerce platform Noon last year, was working on Esanjo, a global real estate management business that operates on open-platform blockchain, when he realised the infrastructure was not in place to allow people to reliably access the new asset class in the region.
Through BitPado, he hopes to solve some of those challenges.
Though he was tight-lipped about investors for the exchange, he confirmed being in talks with regional players to grow the project, with some of the investment coming from Esanjo.
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