Is cryptocurrency trading allowed in Saudi Arabia?
Digital assets are becoming increasingly popular all over the world, as many investors are beginning to see the great return potential that these assets can provide. By the end in 2022, the number of global crypto-asset holders is expected to exceed 1 billion. Although digital currencies have been slow to gain mainstream adoption in the Gulf region and the Middle East. In Saudi Arabia specifically, cryptocurrency ownership has increased rapidly over the past five years, with 77% of the population having some awareness of digital assets and 18% actively trading cryptocurrencies. Despite the high demand of Saudis for digital assets, the question of whether it is permissible to trade and mine digital currencies such as Bitcoin in Saudi Arabia remains open.
Is cryptocurrency trading allowed in Saudi Arabia?
Regulation of digital assets varies from country to country across the GCC. Bahrain, an early adopter of crypto regulations, launched a legal directive in 2019. The directive states that no person may engage in trading activities involving regulated crypto digital assets from within the Kingdom of Bahrain, without obtaining a license from the Central Bank of Bahrain.
In 2020, the Emirates Securities and Commodities Authority (SCA) published “SCA Chairman Decision No. (21/R.M) of 2020 regarding the regulation of crypto assets. This directive also defines a licensing regime for any entity attempting to engage in trading activity related to these digital assets such as exchanges, digital marketplaces, crowdfunding platforms, custody services, or related blockchain-based financial services. The regulation also stipulates that providers of cryptocurrency trading services must be incorporated within the UAE and obtain the correct license. All investors and investment entities within the country must comply with the country’s anti-money laundering and terrorist financing laws.
Unlike its Gulf neighbors, Qatar made the decision to announce a total ban on cryptocurrency trading in 2020. Citing Islamic studies sources, the leadership determined that cryptocurrency trading was a violation of the Sharia principle of prohibiting usury.
While interest in digital assets remains high within the Kingdom (34% of the population expresses interest in investing in these assets), adoption of the latter remains below the global benchmark. However, in the Arab world, Saudi residents are the third largest cryptocurrency holders. Younger, high-income Saudis (earning at least 30,000 riyals per month) are the most likely demographic to trade cryptocurrencies, while those over the age of 45 show greater reluctance.
The first non-fungible token (NFT) market launched in Saudi Arabia in 2021, digitally tradable art has gained the support of several leading artists in the Middle East and North Africa. Saudi Arabia began to know a real investment revolution with what is known as the Internet, not only with the famous Blockchain technology, but also with the possibility of obtaining ownership of virtual assets through non-fungible tokens.
Princess Rym Al-Faisal recently entered the NFT world with the launch of her collection of non-fungible tokens “Makkah and Medina”. Its digital historical images of the holy pilgrimage were sold on the OpenSea NFT market, drawing a lot of attention to this form of digital asset trading within the kingdom.
Is digital currency trading allowed in Saudi law?
Cryptocurrencies have a semi-legal status within the Kingdom of Saudi Arabia, meaning that trading and mining of cryptocurrencies is semi-allowed within the Saudi territorial borders. In 2018, the government imposed an outright ban on banks processing any transactions involving cryptocurrencies. The government has repeatedly emphasized that those who trade in cryptocurrencies do so illegally with no financial protection and risk losing their assets. However, there are currently no legal penalties imposed on people who choose to trade in digital assets, be it crypto or an NFT.
At the moment, the lack of clarity as to whether cryptocurrency trading and mining is or is not permitted in Saudi Arabia is a legal gray area. This means a significant challenge for potential crypto investors inside Saudi Arabia, who may be reluctant to engage in cryptocurrency trading activity for fear of potential legal repercussions. NFTs remain a safe option for many in the kingdom as they are not currently considered cryptocurrencies, as their trading activities do not fall under the blanket cryptocurrency ban.
With Saudi Arabia’s neighboring countries seeking to bring digital asset trading under the control of a comprehensive regulatory and legal framework, it is possible that the kingdom could follow suit in allowing the mining and trading of these assets in the coming years. Young investors in the country maintain a keen interest in all digital assets and are likely to welcome the introduction of regulatory legal regulations that may further legitimize the digital asset space.
Is Bitcoin trading allowed in Saudi Arabia?
After all that has been said about the status of cryptocurrencies in Saudi Arabia, the answer to the question of whether bitcoin trading is allowed in Saudi Arabia seems clear. The Saudi Arabian Monetary Authority (SAMA) has issued a warning against trading Bitcoin as it is not subject to any legal oversight or any support from any legitimate financial authority. Which means trading Bitcoin or any other cryptocurrency is not allowed.
However, in October 2017, the Saudi Arabian Monetary Agency announced that it would implement a pilot project to issue a local digital currency (the riyal) to be used only for interbank transactions.
Is cryptocurrency mining allowed in Saudi Arabia?
Miners are also considered parties to send money, so the ban applies to them as well. This means that the answer to the question of whether cryptocurrency mining is allowed in Saudi Arabia is no. Miners are not legally allowed to mine cryptocurrency in Saudi Arabia.
Some traders believe that not just because the central bank is warning about these digital assets, it means that currency trading is illegal in Saudi Arabia. So far, there are no legal penalties or legal provisions criminalizing the holders and traders of these digital assets.
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