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Cross border Transactions with Cryptocurrency – UAE & Saudi Arabia

Cross border Transactions with Cryptocurrency

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Cross border Transactions with Cryptocurrency


Cross border transactions with cryptocurrency is yet another proof of growing acceptance of Blockchain technology across various industries and countries.

As per The National & Gulf Digital News, UAE central bank governor, Mubarak Rashed Al Mansouri in his press briefing has officially confirmed that the Central Banks of Saudi Arabia and UAE are jointly working on a cryptocurrency for cross-border payments between the two countries.

The UAE Central Bank (CBUAE) governor said that the cryptocurrency would be based on blockchain.

The governor further quoted that:

“It is digitization of what we already do between central banks and other banks”.

It is worth noting that these two banks have in the past expressed skepticism about digital currencies such as bitcoin, with the UAE Central Bank saying it did not recognize bitcoin as an official currency.

In July 2017, the Saudi central bank warned against trading bitcoin because it was outside the bank's regulatory reach. However, now they have progressed towards accepting the blockchain technology.

As per Gulf Digital News:

“CBUAE and Sama intend to execute a joint crypto-currency and Distributed Ledger Proof-of-Concept (PoC). The PoC’s design mainly focuses on the transfer of ownership of a central bank asset (crypto-currency) among participants”

However, the central banks’ cryptocurrency will not be available for retail consumers i.e., It would be used between banks and not by individual consumers.

Instead, the digital tokens will be issued and exchanged between the two central monetary authorities as well as many commercial banks in both countries – all of whom will be participants in the cryptocurrency’s blockchain.

Further, the two central banks also discussed banking priorities and challenges for financial stability in the Arab region, as well as many related relevant topics and issues, such as financial technology (FinTech) and cyber-risk regulation, as well as current issues in financial market infrastructure, resilience, recovery and resolution of central counter-parties.

Al-Mansouri also stated that:

“Crowd-funding platforms, for example have gained widespread attention and growth over the previous few years. At the central bank of the UAE, we started developing regulations in this regard in 2016 to safeguard the financial system and protect consumers, this project is at a final stage".

Blockchain in Banking


IBM and many banks have launched a new blockchain powered solution to clear and settle cross-border payments, using cryptocurrency as a bridge between fiat currencies.

Earlier in October 2017, at the sidelines of Sibos (one of the world’s largest finance events), IBM announced that they have developed a new cross-border payments solution in collaboration with blockchain startup Stellar and KlickEx, a money transfer operator in the South Pacific region. More than 13 banks are involved in the project.

Today, making international payments in multiple currencies can be costly, labourious and error-prone and require multiple intermediaries.

By utilising the Hyperledger Fabric blockchain framework and Stellar’s cryptocurrency lumens, IBM says it can reduce the time it takes to transfer funds across borders from days to seconds” as well as the cost to do so.

Settlement instructions are provided via smart contracts on the Hyperledger blockchain platform, but the actual settlement will be carried out via Stellar’s network.

Stellar’s custom cryptocurrency lumens will “act as a bridge currency between fiat currencies on each side of the transaction”, Bear explains. The customer doesn’t touch the cryptocurrency themselves.

Current arrangement with Stellar is only temporary and that banks would create cryptocurrencies of their own to integrate them into the system.



Cross border transaction fees have been Achilles heel for long. Today even in the age of internet, sending money or making payments across the border i.e., from one country to the other is still plagued with complications, delays and various costs.

This is applicable for both individual as well as businesses. Legacy payment systems split up clearing and settlement into two different operations. Cryptocurrency does it in one step and in real-time.

Cryptocurreny payments are processed on transaction-by-transaction basis without batching payments for clearing followed by later fund settlement through corresponding banking. The simplified clearing & settlement mechanism works because the blockchain acts as the ‘middleman’.

The blockchain uses file sharing technology. It represents trust in digital form, eliminating counterparty risk and chargebacks. Cryptocurrency transactions cannot be reversed, are secure and do not carry personal data. So, it is less likely that merchants/ individuals would may be exposed to fraud. Additionally, settlements are done in legal tender so merchants don’t have to handle cryptos if they don’t want to. 

Making international remittances fair and simple was among the first use cases invented for Bitcoin. Even though the initial concept of low fees and high-speed transactions is now threatened by the increased load on the network and complete absence of any consensus regarding the scalability issue, bitcoin remains a preferable solution for those willing to send money abroad without any involvement of banks and payments processors.

However, buying and selling virtual items using cryptocurrencies is still not a perfect system. People must first obtain the cryptocurrency exchanges to convert fiat currency into bitcoin or other cryptos. Also, cryptocurrency payments lack the simplicity of traditional payment mechanisms like plastic cards.

When one wishes to send money abroad via international remittances services, they don’t have to learn to work with cryptocurrency exchange services. Even though most of them try to offer a user-friendly interface, they mostly focus on traders, not those wishing to exchange their fiat for crypto and then forget the experience as soon as possible. In any case, dealing with cryptocurrency transfers on your own implies many more steps than a card-to-card transfer. 

Say, if someone in country A wishes to send money to someone else in country B, they have to buy the desired amount of SibCoins, which effectively ends the hard part of the whole business.

All the sender must do then is specify the recipient’s phone number and come up with a password which is then sent to the receiving party via any preferable method of instant messaging. The recipient receives a text notification containing a link to the project’s website where they should enter the password and select the desired method of receiving the money (cash or credit card).

Remarkably, the recipient gets the amount in their local currency, which relieves them from the need to undergo a prolonged process of converting a cryptocurrency into fiat.

This method, however, is only being under development, and, once deployed, would require that lots of third-party exchange services come on board, otherwise the entire project would never work.

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