Saudi Arabia warns that cryptocurrencies are illegal in the kingdom

The Standing Committee for Awareness on Dealing in Unauthorized Securities in the Foreign Exchange Market has warned against trading in digital currencies owing to "their negative consequences" and the high risks associated with them

What has happened?

A governmental committee of Saudi Arabian regulators has issued a statement warning that virtual currencies are illegal in the kingdom.

What does this mean?

In a statement, the Standing Committee for Awareness on Dealing in Unauthorized Securities in the Foreign Exchange Market has warned against trading in digital currencies because of "their negative consequences and high risks on traders as they are out of government supervision".

It added:

"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 statement also cautioned Saudi residents about pursuing "illusion and get-rich scheme[s]" as cryptocurrencies carry high regulatory and security risks, not to mention the risk of fraud.

However, the statement does not explain what the penalties are for those found to be trading in cryptocurrencies.

The standing committee was formed by a supreme decree headed by the Capital Market Authority (CMA), the Ministry of Ministry of Interior Membership, the Ministry of Media, the Ministry of Commerce and Investment and the Saudi Arabian Monetary Authority (SAMA), the country's de facto central bank.

The standing committee's remit is to reduce the marketing for investment and trading in virtual currencies by reporting any activity to SAMA or the CMA.

Next steps

If you want to take advantage of blockchain's huge potential and disruptive impact, while avoiding falling foul of ever-developing regulatory and legal requirements, visit our Hogan Lovells Engage Blockchain Toolkit.

Contacts
John Salmon
Partner
London

 

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