A cryptocurrency startup called Bitcoin Egypt is now in the process of launching the first bitcoin exchange in the country.
Co-founded by Rami Khalil and Omar Abdelrasoul, Bitcoin Egypt plans to launch a bitcoin exchange by the end of August.
The firm will at least go into alpha testing by month-end if we are not fully operational, Khalil told a trade magazine.
There have been no (registered) exchanges in Egypt, Khalil said. At launch, the exchange will only support trading between the Egyptian pound and Bitcoin.
The fees will be a fraction of the transaction size (less than 0.25%), Khalil said.
The company plans to add support for other altcoins as well as other fiat currencies in the near future, followed by a payment service.
Only rudimentary contact information (full name, ID numbers, address, etc.,) will be collected by the exchange, Khalil said, adding that since bitcoin is technically a commodity in Egypt, the firm is not bound by any formal KYC/AML regulations.
The firm will only be doing it to deter potential money launderers from abusing anonymity on the exchange, and to be prepared for any future regulations set by the Egyptian government, he said.
The bitcoin ecosystem in Egypt is currently small with only a handful of traders listed on Localbitcoins.
However, according to Khalil, there are a few hundred people actively using and trading bitcoin on a daily basis in Egypt on online forums.
Last week, chairman of the Egyptian Financial Supervisory Authority, Sherif Samy said digital currencies such as bitcoin are neither authorized nor supervised by the authorities.
With the absence of legal and loss protection, any dealings with them carry significant risks, Samy noted.
The Ministry of Finance fully understands what bitcoin is, and only has problems with its potential for money laundering, Khalil said.
The local banks have been firm in asserting that they have no plans to start providing bitcoin services themselves and that they will never consider it a currency, but so far no one has turned the firm away from opening a bank account in its name, he said.
Cryptocurrencies are defined as a digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank.
Examples of cryptocurrencies include Bitcoin and Ethereum They are essentially similar to dirhams or dollars, except they are not physical.
Many cryptocurrencies are produced by mining, a process in which real people use computing power to solve complex mathematical equations that authorise and authenticate transactions, receiving coins in return for their work.