State officials in Saudi Arabia have reminded citizens that trading in cryptocurrency is illegal in the country. This reminder comes following the recent emergence of virtual currency trading promotions in the Arab nation.
No Cryptocurrency Trading License in Saudi Arabia
The Kingdom of Saudi Arabia recently reinforced its stance on the illegality of cryptocurrency trading in the country. In addition, the government created a standing committee headed by the Capital Market Authority to oversee the enforcement of the prohibition. Other members of the committee include representatives of the Ministry of Interior, the Ministry of Information, the Ministry of Trade and Investment, and the Saudi Arabian Monetary Agency (SAMA).
The standing committee debunked the claims made by some websites, saying:
“The claims of these websites that they are authorized by official authorities in the kingdom are incorrect and that no parties or individuals are licensed for such practices.”
The Risks Associated with Cryptocurrency Trading
The standing committee also warned Saudi Arabians about the risks involved with investing in digital currencies. The reasons given include volatility of the crypto market, potential scams, anonymity, and the presence of unenforceable or fictitious contracts. The committee also noted that cryptocurrency trading is outside the scope of government supervision and is also notorious for its use in illicit activities.
Currently, the committee is working with relevant bodies to reduce such marketing activities. This is not just for digital currency trading, as it also includes forex trading on sites not regulated by SAMA. For clarity purposes, investors should refer to the relevant government’s entity website for details of licensed entities.
Cryptocurrency Trading in the Arab World
In January 2018, ArabiaChain, a Dubai-based blockchain start-up, launched a new digital asset exchange, Palmex. This new platform allows users to deposit and trade digital coins including Bitcoin, Ethereum, DubaiCoin, and several others.The platform offers free registration but charges discounted fees on deposits, withdrawals, and trading.
In Egypt, the Grand Mufti, Sheikh Shawki Allam, endorsed a ban on digital currency trading, saying that it is fraudulent, cheating, and forbidden in Islam.
Blockchain Technology Adoption in Saudi Arabia
In February 2018, Saudi Arabian bank, Al Rajhi Bank, announced that it had run a successful trial using Ripple technology. This trial involved using Ripple technology to transfer money from Saudi Arabia and Jordan between bank branches. Still, in February, the Central Bank of Saudi Arabia signed an agreement with Ripple to help banks in the kingdom improve payments infrastructure using xCurrent. Saudi Arabia’s SAMA is the first ever central bank to use this program. On July 11, 2018, it was reported that the municipality of Riyadh, had partnered with IBM. The purpose of this partnership was to execute a series of blockchain technologies in diverse administrative and economic areas.