Digital currencies enter the competition circle … Do you become a substitute for the banking system?

The use of digital currencies in Lebanon is witnessing a remarkable increase, until it plays an alternative way to transfer money after the failure of the deposit and interest options dating back to 2019, and restrictions growing to transfer money from Lebanon and to him. However, the digital currency market in Lebanon is not organized, which exposes investors to great risks.

In this context, economist Professor Pierre El Khoury indicated that many Lebanese, local and expatriates alike, have turned into stable currencies such as USDT or even Bitcoin and their sisters as a way to maintain value or transfer and receive funds outside the banking system. Although it reduces dependence on traditional financial institutions and provides speed and flexibility, its use is restricted to the weakness of digital culture, lack of confidence and extreme volatility in prices, but this acceptance of encrypted currencies carries certain risks.

Given the high fraud and piracy, users are not safe from cheating due to the lack of any organizational framework that provides them with legal protection. Also, the lack of clear laws puts users in a gray legal area, can be harmful if a conflict arises.

From a financial point of view, Al -Khoury pointed out that the absence of adoption on a large scale, sponsoring systems and large fluctuations in prices impedes the generalization of the use of these currencies. Without openness and organization, these currencies are likely to be used for doubtful purposes, including money laundering.

Despite these difficulties, some initiatives based on Blockchain technology began in Lebanon, especially in the areas of digital documents, logistics and real estate. Despite their relatively small size and impact, these projects show potential beginnings of an alternative digital economy with legal and institutional support.

Lebanon has witnessed an extraordinary growth in the operations of coded currency mining in recent years, along with these emerging projects, driven by increasing bitcoin prices on the one hand and the energy available on the other hand.

According to Al -Khoury, every user who does not use all private generator energy has an indirect economic opportunity in a society that often depends on private generators because he can operate bitcoin mining machines using the pre -paid output. These activities ranged from small personal initiatives inside homes or workplaces to medium -sized mining farms equipped with cooling and control systems, and added a practical element to Lebanese participation in the digital economy.

Amid the continuous decrease in the value of the Lebanese lira, these developments have become of double importance because cryptocurrencies have become an alternative shelter for many people trying to keep their money away from the continuous deterioration of the national currency and to inflation on the US dollar itself.

Despite its danger, some investors are looking for quick rewards through speculation while others use bitcoin currencies to protect their investments. It indicates the increasing acceptance of stable currencies as semi -formal assets, many traders have also begun to use them in their daily transactions.

Al -Khoury considered that, given the lack of confidence in the Lebanese banking system, the digital currencies began to be a potential competitor, especially as it allows the transfer of funds and keeping them and even lending them without the use of financial brokers. But even with these options, looking at cryptocurrencies as an actual alternative to the banking system faces great challenges related to digital infrastructure, the degree of financial knowledge, and the absence of legislative support. Although it is faster and more flexible than traditional banking services, it does not have the safety of the legal and model user, and therefore it is a more complementary option than a real alternative at the present time.

From a tax perspective, the state’s treatment of bitcoin gains is still unclear. Although the tax authorities can be seen as an income source when approved officially, there is no clear legal framework that imposes taxes on these gains, and thus users are exposed to uniform personal expectations.

He stressed that some evidence indicates the Lebanese government’s future desire to control this sector more clearly, either by adopting certain tax laws or creating regulatory tools to monitor digital transactions.

In this context, the Bank of Lebanon has expressed since 2020 its desire to work on issuing the digital lira, but the idea has not applied in any clear executive procedure so far. The main obstacles that prevent this path are the weakness of the digital infrastructure and the floods that the central bank is exposed to, but it is possible to use an official digital currency in the future as a mechanism for allocating subsidies or organizing cash flow., Al -Khoury.

He stressed that, however, such a currency, which may gradually implemented, can provide new boundaries for financial inclusion and help to fight black money.
So, digital currencies are a rising financial and economic event in Lebanon that are directly related to the collapse of the traditional banking system, as well as the popularity of this type of asset globally. While these currencies swing between opportunities and risks, the government and the legislators must move quickly to control this field to protect users and promote sustainable digital innovation.