Jordan -- Stablecoin Regulations Regulatory Overview

Jordan currently does not have a specific, comprehensive regulatory framework tailor-made for stablecoins. The Central Bank of Jordan (CBJ) has generally adopted a cautious, if not prohibitive, stance towards cryptocurrencies, including stablecoins, for regulated financial institutions.

This means that most stablecoin activities operate in a legal grey area, and regulated entities are largely discouraged from engaging with them.

Here's a breakdown based on the current situation and existing general financial laws:

Regulatory Framework for Stablecoins in Jordan

Overall Stance: The Central Bank of Jordan (CBJ) has consistently issued warnings against dealing in cryptocurrencies, stating they are not legal tender, lack regulatory oversight, and pose high risks to users. For regulated financial institutions, the CBJ's stance effectively restricts their ability to offer services related to cryptocurrencies.

1. Classification of Stablecoins:

• No Specific Classification: Jordan's legislation does not explicitly define or classify stablecoins as e-money, payment tokens, or securities.
• Potential for Existing Frameworks (Hypothetical if Regulated):
  • E-Money/Payment Tokens: If a stablecoin were to be recognized and regulated, it would most likely fall under the Payment Systems and Services Law No. 11 of 2017. This law governs electronic payment services, including e-money. A stablecoin could potentially be considered e-money if it represents electronically stored monetary value as a claim on an issuer, used for payment transactions.
    • Reference:
      • Payment Systems and Services Law No. 11 of 2017:
        • While a direct English translation from an official CBJ site can be hard to find, reputable sources and international organizations refer to it. For instance, the World Bank's Global Payment Systems Survey for Jordan references this law extensively.
        • Example summary reference: International Finance Corporation (IFC) on Jordan's Payment System (Though this is a general reference, the law is foundational to Jordan's payment system.)
        • Another relevant source citing the law: Central Bank of Jordan - Overview of Payment Systems (This page describes the regulatory framework for payment systems, implicitly referring to the Payment Systems and Services Law).
  • Securities: Less likely for typical stablecoins aiming for price stability. However, if a stablecoin's design includes features that give holders rights to profits, equity, or other investment characteristics, it could potentially be viewed as a security under the Securities Law No. 18 of 2017, regulated by the Jordan Securities Commission (JSC).
    • Reference:
      • Securities Law No. 18 of 2017:
        • Jordan Securities Commission (JSC) - Laws and Regulations (This is the Arabic version. English translations of specific laws are often provided by law firms or on legal databases).

2. Reserve Requirements:

• None Specific: Since stablecoins are not specifically regulated, there are no specific reserve requirements for stablecoin issuers in Jordan.
• Hypothetical E-money Requirements: If a stablecoin were classified as e-money under the Payment Systems and Services Law, then the issuer would be subject to prudential requirements, including safeguarding customer funds, which typically involves holding reserves in highly liquid, low-risk assets (e.g., central bank funds, government bonds).

3. Issuer Licensing:

• None Specific: There is no dedicated licensing regime for stablecoin issuers.
• Hypothetical E-money Licensing: If a stablecoin issuer were to operate within Jordan and be classified as an e-money issuer, they would need to obtain a license from the Central Bank of Jordan as a Payment Service Provider (PSP) or E-Money Issuer under the Payment Systems and Services Law. This involves meeting capital requirements, governance standards, and anti-money laundering (AML)/combating the financing of terrorism (CFT) obligations.

4. Redemption Rights:

• None Specific: Without specific regulation, there are no legally guaranteed redemption rights for stablecoin holders in Jordan under a dedicated framework.
• Hypothetical E-money Rights: If stablecoins were regulated as e-money, holders would likely have redemption rights as per e-money regulations, allowing them to convert their e-money back to fiat currency at par value.

5. Algorithmic Stablecoin Rules:

• None: Given the general lack of a regulatory framework for stablecoins, there are no specific rules or prohibitions regarding algorithmic stablecoins. Their inherent volatility and lack of direct fiat backing would likely make them even more subject to the CBJ's general warnings about high-risk cryptocurrencies.

6. CBDC Interaction:

• Exploration Stage: The Central Bank of Jordan has publicly stated its interest in exploring Central Bank Digital Currencies (CBDCs).
  • In various reports and statements, the CBJ has indicated it is studying the potential benefits and risks of issuing a digital Jordanian Dinar (JOD) as part of its efforts to modernize the payment system and enhance financial inclusion.
  • Reference: While specific detailed project documents might not be public, the CBJ has referenced this in its strategic plans and communications.
    • General CBJ statements on digital transformation and payment system modernization often allude to CBDC exploration. For instance, in annual reports or strategic outlooks.
    • News articles often report on these statements: Example News Article (unofficial source, but reflects official statements): Jordan Times on CBJ exploring digital currency (This article, while not an official CBJ publication, references official CBJ statements on the matter).
• Potential Impact: If Jordan were to launch a CBDC, it would significantly impact the landscape for private stablecoins. A state-backed digital currency could potentially:
  • Reduce the demand for private stablecoins if the CBDC offers similar stability and efficiency.
  • Lead to clearer regulatory guidelines for private stablecoins, perhaps differentiating them from the CBDC and setting specific rules for their interoperability or coexistence.
  • However, until a CBDC is launched and a clear regulatory framework is established, the interaction remains speculative.

Key Legislation & Regulatory Body:

• Central Bank of Jordan (CBJ): The primary financial regulator responsible for monetary policy, payment systems, and financial stability.
  • Website: https://www.cbj.gov.jo/
• Payment Systems and Services Law No. 11 of 2017: Governs e-money and payment service providers.
• Securities Law No. 18 of 2017: Governs securities and investment instruments.
• Cybercrime Law No. 17 of 2023: While not directly regulating stablecoins, this law provides a framework for addressing cyber-related crimes, including those that could involve cryptocurrencies (e.g., fraud, money laundering).
  • Reference: Jordan Cybercrime Law No. 17 of 2023 (summary in English, law itself is in Arabic)

Conclusion:

Jordan's approach to stablecoins, and cryptocurrencies in general, remains highly cautious. There is no specific legal framework for them. Any entity wishing to issue or facilitate stablecoin transactions in Jordan would likely face significant regulatory hurdles, primarily due to the CBJ's general warnings and the lack of clear legal recognition, which deters regulated financial institutions from engagement. The development of a national CBDC could, in the future, trigger the creation of a more defined regulatory stance towards private digital currencies.

Disclaimer: This information is for general knowledge purposes only and does not constitute legal or financial advice. Given the evolving nature of digital asset regulation, it is essential to consult with legal professionals in Jordan for the most current and specific advice.