Is Crypto Legal in Saudi Arabia?

Legal Standing of Crypto Trading in Saudi Arabia

The ownership and trading of cryptocurrencies are prohibited by the law in the Kingdom of Saudi Arabia. The Saudi authorities took this decision and most of the trading and the activities of the cryptocurrencies take place outside the legal framework of the country. The handling of cryptocurrencies also has no support whatsoever from any governmental authority in the Kingdom of Saudi Arabia. 

Major financial authorities in KSA, including the Saudi Arabian Monetary Agency (SAMA), have declared warnings and stated that there are no parties that are allowed to carry out any activities related to cryptocurrencies.

The current laws in KSA

Back in 2018, a governmental committee was formed in KSA and it announced that the trading of any virtual currencies is considered illegal all over the kingdom. From the other side, the Saudi Ministry of Finance has seconded that decision stating that cryptocurrencies are not part of the legal framework of the country. Thus, no party, regardless of its state, is allowed to deal with it.

The regulating governmental bodies in KSA

Many governmental bodies in KSA asserted that it is completely forbidden to deal with virtual assets and cryptocurrencies within the kingdom. 

Saudi Arabian Monetary Authority (SAMA): This is the central bank of the Kingdom of Saudi Arabia and supervises all financial matters in the country. The authority declared warning against any activities related to virtual assets. 

Capital Markets Authority (CMA): This authority is accountable to all matters related to the capital markets in the Kingdom of Saudi Arabia. The same as SAMA, CMA declared warnings against anything associated with cryptocurrencies inside the kingdom. 

Ministry of Finance (MOF): As one of the leading authorities in financial matters in KSA, the Ministry has warned against any activities related to virtual assets and asserted that these activities are highly related to crimes and fraud. 

A Historical Background 

The Central Bank of Saudi Arabia issued a warning back in 2017 against anything or any activity related to virtual assets or cryptocurrencies. The situation even got firmer when a governmental committee was formed and announced that all these activities are illegal and forbidden inside the kingdom. 

From its side, the Ministry of Finance, in 2019, reaffirmed the decision stating that it is completely illegal to deal with virtual assets of all sorts. However, despite all these procedures, the Kingdom of Saudi Arabia started using blockchain technologies but only for official utilization. These efforts began with Project Aber, which consists of a digital asset that is shared with the United Arab Emirates. 

Requirements for Compliance for Companies that deal with cryptocurrencies in KSA

The Kingdom of Saudi Arabia does not approve virtual assets. Thus, the authorities in KSA never announced a framework for businesses that work in these activities to comply with. On the other hand, the Saudi authorities never announced any certain Anti-Money Laundering (AML) or Know Your Customer (KYC). This is simply because they virtual assets are outside the legal framework of the country and dealing with them is considered illegal. All these steps refrain any company to associate virtual assets and cryptocurrencies with the Kingdom of Saudi Arabia. 

How does this impact payment between countries? 

The firm embargo against the usage or dealing of cryptocurrencies in the Kingdom of Saudi Arabia has affected companies inside the kingdom which need to carryout payments outside the county. This is because the government has banned one of the easiest and fastest payment tools. 

This made companies operating in the Kingdom of Saudi Arabia resort to the classical banking transactions which regularly cost more money and take more time. This caused operational problems for some of the companies working in the Kingdom.

Final Thoughts 

The authorities of the Kingdom of Saudi Arabia have officially and clearly announced that dealing with virtual assets and cryptocurrencies is prohibited inside the Kingdom. However, no fines or punishments have been publicly announced yet. The Kingdom is trying to protect its economy against money laundry and fraud. Nevertheless, it prevents companies operating inside KSA from benefiting from one of the easiest and fastest payment tools.