Saudi Arabia’s special government committee dedicated to the “awareness on dealing with unauthorized securities activities in the foreign exchange market” has warned against transacting with – and investing in – cryptocurrencies. The committee further cautioned that conducting such transactions is illegal and could have “negative consequences.”
Governments all over the world have struggled on how to deal with cryptocurrency. Some nations welcome digital currencies, while others seek to impose strict regulations. A few countries are openly hostile to Bitcoin and its digital brethren, and we can now add Saudi Arabia to that list as the kingdom has decreed that all forms of cryptocurrency trading are illegal.
Saudi Arabia Cracks Down
The government of Saudi Arabia lowered the boom on crypto trading on Sunday. Convened by royal order, a standing committee comprised of the Capital Market Authority, Saudi Arabian Monetary Authority, Ministry of Media, Ministry of Interior membership, and Ministry of Commerce and Investment released a decree, stating:
The standing committee warns against trading in the digital currencies or what is known as virtual currency for their negative consequences and high risks on traders as they are out of government supervision. The committee assured that virtual currency including, for example but not limited to, the Bitcoins are illegal in the kingdom and no parties or individuals are licensed for such practices. The committee warns all citizens and residents about drifting after such illusion and get-rich scheme due to the high regulatory, security and market risks involved, not to mention signing of fictitious contracts and the transfer of funds to unknown recipients/entities/parties.
Needless to say, this is a massive blow to cryptocurrency traders and enthusiasts within the country. While Bitcoin trading volume was never very high in the region – averaging about $320,000 per week over the last month – there was still viable interest. The Stellar cryptocurrency even became sharia-compliant not too long ago in order to boost its use in the Middle East.
A Setback?
The cryptocurrency trading crackdown is rather unexpected. The action does follow that of India and China, but the country has been making progressive strides recently, such as allowing women to drive. However, the central government still prefers to control most aspects of the population’s everyday life.
It’ll be interesting to see how this ban will impact Ripple. Last month, Al Rajhi Bank successfully used the Ripple blockchain, and the cryptocurrency company was looking forward to increasing its exposure to the country’s banking system. Will XRP still be used to quickly and easily transfer funds?
It appears that while cryptocurrency trading is off the table, Saudi Arabia is still big on blockchain technology. Just a few months ago, the country’s Ministry of Communications and IT partnered with ConsenSys, a company that builds enterprise-grade software powered by the blockchain. Between the country’s banking system and government agencies, there is a desire to increase the presence of blockchain technology in the country.
It’s sheer speculation, but it may be that the kingdom is considering creating its own cryptocurrency eventually, which will allow the central government to retain control.
Do you think this cryptocurrency trading crackdown will hurt Saudi Arabia? Let us know in the comments below.
Images courtesy of Shutterstock