Saudi Arabia is set to revise its perception of cryptos. After fighting digital currencies to no avail, the country’s central bank is capitulating and thinking about regulating the sector. The country is obviously inspired by the United Arab Emirates (UAE), which has ambitions to become the hub of the crypto ecosystem.
Towards regulation instead of ban on cryptos in Saudi Arabia
Saudi authorities are considering formally regulating cryptocurrencies in the country. According to several sources including bloomberg, the Saudi central bank has set up a program dedicated to digital assets. The said program is headed by a certain Mohsen Al Zahrani.
The sources quoted by Bloomberg also reveal that Saudi Arabia has a team working in common agreement with several crypto companies. The purpose would be to gather different opinions on what regulatory standards to adopt.
The appointment of Mohsen Al Zahrani comes nearly four years after Saudi Arabia banned cryptocurrencies. Indeed, in August 2018, the Saudi Arabian Monetary Authority (SAMA) had warned Saudis against using cryptocurrency, calling it illegal.
The committee warns against cryptocurrency trading for their negative consequences and high risks on traders as these are not under government supervision. The committee assured that crypto-currencies, including, for example, but not limited to, Bitcoin are not approved as official currency in the kingdom […].SAMA Press Release
Saudis challenge SAMA
The Saudi Arabian Monetary Authority‘s warning about the use of cryptocurrency seems not to have been heeded by Saudis. Just like in other countries in the region, statistics show cryptocurrency adoption still on the rise in Saudi Arabia. According to a survey by exchange Kucoin, about three million Saudis, or about 14% of the adult population aged 18 to 60, are either crypto investors or have traded in crypto during the first six months of 2022.
The outlook for cryptocurrency adoption is encouraging in the country as 17% of the adult population identify themselves as crypto-curious who may invest in the sector in the next six months.
Saudi Arabia has probably been inspired by its neighbor. Indeed, the United Arab Emirates has put in place a pro-crypto regulatory framework. This is attracting investors in the sector. Several cryptocurrency exchange platforms such as Binance and FTX have obtained licenses to operate in the UAE. Initiatives to make cryptocurrency more commonplace in the emerging country. It remains to be seen whether the awakening of the Saudi giant will steal the spotlight from the UAE, which is already positioning itself as the hub of the crypto sector in the region.
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