Technology regulation and security governance in Jordan

Jordanians received ominous messages from their banks last week. Citing new Central Bank regulations, banks warned that they would no longer allow their customers to trade in cryptocurrencies and would not accept any transactions with crypto brokerage firms and trading platforms. While traders lament potential losses and missed opportunities, the issue points to more systematic issues concerning technology regulation and security governance in the country.اضافة اعلان


The bitcoin logo printed on a gold coin. (Photo: Unspalsh)

In many respects, the decision to ban trading in crypto currencies should not come as a surprise. Jordanian authorities typically choose the blanket ban option whenever a new or disruptive technology emerges; commercial drones and 3D printing are other recent examples. That authorities struggle to comprehend the use and implications of new technologies is not a Jordanian phenomenon at all. Anyone who watched the testimony of Facebook founder Mark Zuckerberg at the US Senate a few years ago could see the disconnect between the presiding senators and Zuckerberg, which has come to represent the capacity gap between regulators and technology developers on these issues.

What is a more uniquely Jordanian phenomenon, however, is the unwillingness to try to figure out the right regulatory framework for technology governance and the public communication surrounding these issues.

The all-or-nothing approach seen in this and similar bans is likely the result of the primacy of security calculations in the decision-making process. Security communities in Jordan have long been known to be risk averse and typically prefer to err on the side of caution. This begs the question: what is so concerning about trading in crypto currencies to the authorities? An educated guess would be fear of money laundering.

Driven by conflict in neighboring countries and the growth of ungoverned spaces and trafficking over the past decade or two, anti-money laundering and counter terrorist financing efforts have been an important yet discreet cornerstone of Jordan’s security architecture. While the risk that crypto trading could be used as a cover to launder money abroad and return it to the country seems genuine, a graded approach to the risk suggests it pales in comparison to other sectors of the economy. One need to only look at large real estate projects and some of the more dubious developers to appreciate the risk relative to crypto trading.

Jordanians are also undoubtedly upset by the conflicting public messaging on the issue of technology on the whole. The decision came during the same period that the Jordanian government was celebrating and touting the success of the tech sector, including the Jordanian startup BitOasis, the region’s first cryptocurrency trading platform. The ban strongly contradicts the welcoming and talent-nurturing image that the government seeks to promote for itself and the country’s tech sector.

Equally upsetting is the absence of any justification regarding the decision, though an often cited reason in the past was consumer protection. The general public is finding this explanation of the state hard to accept, especially because the issue does not concern the regulation of domestic financial markets and because other high-risk or “socially detrimental” activities such as online international gambling platforms are not banned.

The immediate implementation of the ban without warning or a grace period has also upset traders who have open positions and money in brokerage firms abroad that cannot be returned to the country anymore.

Technology regulation is not meant to be easy. Even the most developed countries are grappling with issues surrounding the disruption caused by big tech. It is unlikely that Jordan will ever be an early adopter of technologies like cryptocurrencies, but a default and knee-jerk rush to ban has other repercussions. A simple cost-benefit analysis suggests that the cost of pushing Jordanians to set up accounts abroad to retrieve their profits from brokerage firms and platforms outweighs the potential benefits of a ban.


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