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Qatar’s central bank has issued a circular warning all banks in the country that trading Bitcoin and other cryptocurrencies is prohibited. The news has been confirmed by financial sources and a circular viewed by Reuters.

A letter sent by the Qatar central bank to all financial instructions operating in the country “politely requested banks and exchange houses in the country not to deal in any way with this [digital] currency, or exchange it with another currency, or open accounts to deal with it, or send or receive any money transfers for the purpose of buying or selling this currency”.

The circular observed that Bitcoin is an illegal currency, since none of the central banks or governments in the world have formally recognized it as an acceptable form of payment or store of value akin to fiat currency or gold.

“This cryptocurrency is highly volatile and can be used for financial crimes and electronic hacking as well as risk loss of value because there are no guarantors or assets,” the circular added.

Should the circular be violated, penalties will be imposed under the Qatar Central Bank law and regulation of financial institutions issued by Law No. (13) for the year 2012.

According to Reuters, commercial bankers in the country are already steering clear of Bitcoin and its peers. However, residents of Qatar have been displaying interest in investing in cryptocurrencies, and exploring options of buying through online exchanges.

The notorious volatility of cryptocurrencies and the anonymity they offer has led to increased calls for regulation. Events such as the recent crypto market crash (from which the market has yet to recover fully), coupled with incidents involving robberies, hacks, and fraud, have put governments worldwide on high alert, even as demand among retail and institutional investors continues to grow.

While regulators throughout the Middle East have expressed concern about digital currencies, Qatar’s stance is the most decisive yet. Regulators in both UAE and Oman have issued investor warnings, to alert the public about the possible risks of investing in cryptocurrencies. Saudi Arabia, meanwhile, has also urged its citizens to avoid Bitcoin, since it is beyond the regulatory reach of the central bank. Interest and involvement in blockchain technology and fintech ventures, however, is at an all-time high in the Middle East.