The blockchain is no stranger to the Middle-East: Iran are set to introduce their own cryptocurrency, Dubai host major blockchain conferences, and Saudi Arabia have struck deals with Ripple and ConsenSys, which is why the news that the Saudi government has deemed crypto trading as illegal was a bolt from the blue.
In May, BitMoneyNews.com featured an article entitled “Saudi Arabia Continue To Be The No.1 Country Championing Cryptocurrency.” This opinion was based on the Saudi national bank striking a deal with Ripple with a view to introducing XRP and blockchain technology to all banks across the country. This was followed by the Saudi national telecommunications company striking up a deal with a theory and based startup consensus designed to reboot and improve the country’s telecommunications system.
Neighbors the UAE and Qatar had already absorbed block chain technology into their financial and business worlds, and it seemed only a matter of time before Saudi Arabia followed suit.
Bitcoin Deemed Illegal
It was therefore a somewhat unpleasant surprise when news broke today that a standing committee made up of various Saudi government ministries as well as the Saudi central bank had issued a warning stating that any trading of “unauthorized crypto currencies” such as Bitcoin is now deemed to be illegal within Saudi Arabia.
In an official statement issued today by the Saudi Arabian Monetary Authority (SAMA, headquarters pictured above), it seems that on Sunday the Saudi central bank sat down with a governmental committee and decided that they were against the trading of cryptocurrencies. Their official reason?
“Their negative consequences and high risk on traders.”
Saudi citizens have been ordered to avoid “such illusion and get-rich” schemes, and have been warned that cryptocurrencies are now regarded as an illegal activity.
From Watchdog To Standing Committee
The standing committee began life as a watchdog, investigating “unauthorized securities activities in the foreign exchange market’. The watchdog may have answered to Prince Al-Waleed bin Talal (pictured), who has recently described Bitcoin as a “fraud” going on to say:
“I just don’t believe in this bitcoin thing. This thing is not regulated. It’s not under control. It’s not under the supervision of any federal – elect – United States Federal Reserve or any other central bank.”
Saudi Arabia’s Capital Market Authority (CMA), the Interior, Media, Commerce & Investment ministries as well as SAMA were all apparently investigated. The watchdog’s remit was to inform relevant authorities of any trading or investments in forex or cryptocurrency.
A statement said:
“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.”
It is one thing for a country’s government to disagree with a concept or practice such as cryptocurrency trading and to publicly discourage citizens from partaking in such a practice, as in the case of the UK, but to deem it “illegal” changes the demographic completely, especially in a nation notorious for draconian and medieval forms of punishment such as Saudi Arabia, although at the time of writing, no official form of punishment had been announced.
Ironically, this news comes soon after it emerged that SAMA are in fact developing their own cryptocurrency, designed specifically for blockchain-powered cross-border transactions with the UAE’s central bank.