Business

Ed Drake

Saudi Arabia bans crypto over ‘high risks,’ ‘negative consequences’

The Kingdom of Saudi Arabia has made cryptocurrencies illegal by diktat, following a change in the law designed to protect residents from engaging in crypto transactions.

The Saudi Arabian Monetary Authority (SAMA) made the announcement last week, rendering digital currencies illegal within the Arab state for the first time, over concerns about the ‘negative consequences’ and ‘high risks’ of failing cryptocurrencies like BTC.

SAMA officials said that the lack of government supervision, combined with the risks of BTC, meant it would now become illegal to deal in cryptocurrency.

“The standing committee warns against trading in [BTC]…for their negative consequences and high risks on traders as they are out of government supervision,” according to the SAMA statement. “[BTC is] 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.”

The Saudi Arabian Monetary Authority is the de facto central bank for the Kingdom, tasked with overseeing financial stability and the banking sector. Amongst its roles is ensuring the stability of the Saudi financial system, which the authority suggests is undermined by cryptocurrencies like BTC.

The news is particularly interesting given the political changes taking place in the country, at the hands of Crown Prince Mohammad bin Salman bin Abdulaziz Al Saud, the youngest ruler in the country’s history at just 32 years old.

One of the youngest holders of high office anywhere in the world, he has been credited as a modernizer and reformer, including for his policies around women’s rights in the traditionally very conservative Kingdom. His personal views on cryptocurrency are unknown, but other Saudi royals have been critical of BTC. Saudi Prince Al-Waleed bin Talal was previously quoted on American TV as labelling BTC a ‘fraud.’

Despite the ostensible opposition to cryptocurrencies like BTC, the Saudi Arabian Monetary Authority is known to have been working with Ripple’s settlement technology, as well as discussions around creating a state-backed cryptocurrency, in collaboration with the neighboring United Arab Emirates.

For the time being at least, BTC lovers in Saudi would be advised to turn their attention elsewhere.

Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as SegWitCoin BTC coins. Altcoins, which value privacy, anonymity, and distance from government intervention, are referenced as dark coins.

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