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Retail_Trading_Status

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2025-06-26 13:17
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Executive Summary

Retail cryptocurrency trading in Saudi Arabia operates in a "Gray-Zone." While not explicitly banned, it faces strong warnings from the Saudi Central Bank (SAMA) and the Capital Market Authority (CMA). There is no specific licensing or regulatory framework for cryptocurrency exchanges catering to retail investors, and cryptocurrencies are not recognized as legal tender. Saudi Arabia is exploring blockchain technology and CBDCs, indicating a potential future shift in regulatory approach, but banks are restricted from processing crypto transactions.

Key Pillars

The primary regulators are the Saudi Central Bank (SAMA) and the Capital Market Authority (CMA), which issue warnings against cryptocurrency trading due to its high-risk nature and potential for illicit use. There are no specific licensing or registration requirements for cryptocurrency exchanges catering to retail investors. However, existing Anti-Money Laundering (AML) and Counter-Terrorist Financing (CFT) laws apply, requiring businesses facilitating virtual asset exchanges to comply with customer due diligence (CDD) and suspicious transaction reporting (STR).

Landmark Laws

The report mentions the Anti-Money Laundering Law and the Law on Combating Terrorist Crimes and its Financing. The implementing regulations of the CFT law include "electronic currencies" under financial activities. There is also reference to a 2018 joint statement from SAMA and CMA warning against virtual currencies.

Considerations

Cryptocurrencies are not recognized as legal tender in Saudi Arabia. The regulators, SAMA and CMA, have raised concerns about the high risks, volatility, and potential for illicit use associated with cryptocurrencies. Banks are restricted from processing cryptocurrency-related transactions. Despite the lack of a formal legal framework, a portion of the population engages in cryptocurrency trading, primarily through international platforms. Tax treatment of cryptocurrencies is not explicitly mentioned.

Notes

Historically, Saudi Arabian authorities have been cautious towards cryptocurrencies, issuing warnings as early as 2018. Saudi Arabia is exploring blockchain technology and Central Bank Digital Currencies (CBDCs), including involvement in projects like Project Aber and Project mBridge, with SAMA establishing a fintech sandbox. The CMA has also explored FinTech ExPermits for security tokens. The report notes a discrepancy, with some sources suggesting individual ownership and trading aren't explicitly banned, while others consider it illegal based on the 2018 warnings. The government is reportedly in discussions with industry players to explore potential regulatory frameworks, and SAMA has appointed a dedicated head for virtual assets and CBDC initiatives.

Detailed Explanation

The retail cryptocurrency trading landscape in Saudi Arabia is characterized as a "Gray-Zone." While there is no outright ban on individuals owning or trading cryptocurrencies, the environment is shaped by strong warnings from authorities, a lack of formal legal recognition, and the absence of a specific licensing or regulatory framework for cryptocurrency exchanges serving retail investors. In 2018, the Saudi Central Bank (SAMA), formerly known as the Saudi Arabian Monetary Authority, and the Capital Market Authority (CMA) issued joint statements cautioning against trading in virtual currencies like Bitcoin, citing their high-risk nature and potential for illicit activities. These warnings emphasized that cryptocurrencies are not legal tender and lack specific protections for traders; banks were reportedly restricted from processing crypto-related transactions. The Ministry of Finance issued a similar warning in 2019. SAMA and CMA have reiterated warnings about the risks of cryptocurrency investment. As of early 2025, Saudi Arabia has not enacted specific legislation to govern cryptocurrencies or crypto-asset service providers for the retail market. The operation of cryptocurrency exchanges is not officially permitted. Saudi Arabia has a robust Anti-Money Laundering (AML) and Counter-Terrorist Financing (CFT) framework including the Anti-Money Laundering Law and the Law on Combating Terrorist Crimes and its Financing. Although these laws do not explicitly mention crypto assets in detail, the implementing regulations of the CFT law include "electronic currencies" under financial activities. Banks are also expected to prevent transfers to offshore crypto sites. Saudi Arabia is actively exploring blockchain technology and Central Bank Digital Currencies (CBDCs), such as its involvement in Project Aber with the UAE and more recently Project mBridge. SAMA has established a fintech sandbox to allow experimentation with new financial technologies. The CMA has also explored FinTech ExPermits for activities involving security tokens. Despite the official cautionary stance, there's growing interest and significant trading volumes through international platforms, particularly among the youth. Some sources indicate that individual ownership and trading are not explicitly banned, although discouraged and without legal protection, while others suggest trading is illegal based on the 2018 warnings. Discussions are reportedly ongoing with industry players and regulators to explore potential regulatory frameworks for digital currencies. The appointment of a dedicated head for virtual assets and CBDC initiatives within SAMA signals evolving interest. This combination of factors places retail cryptocurrency trading in a "Gray-Zone" in Saudi Arabia. Individuals engaging in such activities do so with significant risk and without the protections afforded by a regulated environment.

Summary Points

Okay, here's the regulatory analysis report on Retail_Trading_Status in Saudi Arabia, converted into a clear, well-structured bullet point format:

Retail Cryptocurrency Trading Status: Saudi Arabia (as of June 26, 2025)

I. Overall Regulatory Status: Gray-Zone

  • Retail cryptocurrency trading exists in a "Gray-Zone" due to:
    • No explicit ban on individual holding/trading, but strong discouragement.
    • Lack of formal legal recognition and specific regulation for retail crypto trading platforms.
    • Official warnings and restrictions on financial institutions.
    • Ongoing exploration of digital assets and potential future regulation.
    • Actual usage by residents, often through offshore exchanges.

II. Key Regulatory Bodies and Their Roles

  • Saudi Central Bank (SAMA) (formerly Saudi Arabian Monetary Authority):
    • Issues warnings about the risks of cryptocurrency trading.
    • Restricts banks from processing cryptocurrency-related transactions.
    • Exploring Central Bank Digital Currencies (CBDCs) and blockchain technology.
    • Established a fintech sandbox for experimentation.
    • Appointed a dedicated head for virtual assets and CBDC initiatives.
  • Capital Market Authority (CMA):
    • Issues warnings about the risks of cryptocurrency investment and speculation.
    • Explored FinTech ExPermits for security tokens.
    • Affirms that investment, speculation and participation in the digital currency initial offers involve high risk.
  • Ministry of Finance:
    • Issued warnings about the risks of cryptocurrency investment and speculation.

III. Important Legislation and Regulations

  • No specific cryptocurrency legislation exists for the retail market.
  • Anti-Money Laundering (AML) Law and the Law on Combating Terrorist Crimes and its Financing:
    • Apply to virtual asset exchanges, even those operating in the gray area.
    • Require customer due diligence (CDD) and suspicious transaction reporting (STR).
    • Implementing regulations of the CFT law include "electronic currencies" under financial activities.

IV. Requirements for Compliance

  • AML/CFT Compliance: Businesses facilitating virtual asset exchanges are expected to comply with AML/CFT regulations.
    • Customer Due Diligence (CDD)
    • Suspicious Transaction Reporting (STR)
  • Banks: Expected to prevent transfers to offshore crypto sites.

V. Notable Restrictions or Limitations

  • No Legal Tender Status: Cryptocurrencies are not recognized as legal tender in Saudi Arabia.
  • No Formal Licensing Regime: No specific licensing regime exists for cryptocurrency exchanges catering to retail investors.
  • Restrictions on Financial Institutions: Banks are prohibited from facilitating cryptocurrency transactions.
  • Lack of Investor Protection: No specific investor protection mechanisms are in place for cryptocurrency trading.
  • Offshore Exchanges: Trading primarily occurs through international platforms.

VI. Recent Developments or Changes

  • Exploration of Blockchain and CBDCs: SAMA is actively exploring blockchain technology and CBDCs (e.g., Project Aber, Project mBridge).
  • Fintech Sandbox: SAMA has established a fintech sandbox to allow experimentation with new financial technologies.
  • FinTech ExPermits: CMA has explored FinTech ExPermits for activities involving security tokens.
  • Growing Interest: Increasing interest in cryptocurrencies among the Saudi population, particularly the youth.
  • Discussions on Regulatory Framework: The Saudi government is reportedly in discussions with industry players and other regulators to explore potential regulatory frameworks for digital currencies.
  • Appointment of Dedicated Head: SAMA has appointed a dedicated head for virtual assets and CBDC initiatives.

VII. Key Takeaways

  • Cautious Approach: Saudi Arabia maintains a cautious and evolving approach to cryptocurrency regulation.
  • Risk and Lack of Protection: Individuals engaging in cryptocurrency trading do so with significant risk and without the protections afforded by a regulated environment.
  • Potential for Future Regulation: The ongoing exploration of digital assets and discussions about a regulatory framework suggest a move towards a more defined approach in the future.

Full Analysis Report

Retail Cryptocurrency Trading Status: Saudi Arabia

Report Date: 2025-06-26

Topic: Retail_Trading_Status

Description: Assess whether individual citizens and residents in the country are legally permitted to buy, sell, and hold cryptocurrencies. Detail the regulatory environment surrounding this activity (e.g., KYC/AML requirements imposed on platforms, general warnings issued).

1. Identified Current Status

Gray-Zone

2. Detailed Narrative Explanation

The status of retail cryptocurrency trading in Saudi Arabia is best described as a "Gray-Zone". While there isn't an explicit, outright ban on individuals owning or trading cryptocurrencies, the regulatory environment is characterized by strong warnings from authorities, a lack of formal legal recognition, and no specific licensing or regulatory framework for cryptocurrency exchanges catering to retail investors. This creates a complex and ambiguous situation for individuals interested in cryptocurrency activities.

Historical Context and Official Stance:

Historically, Saudi Arabian authorities have adopted a cautious and often prohibitive stance towards cryptocurrencies. In 2018, the Saudi Central Bank (SAMA), formerly known as the Saudi Arabian Monetary Authority, and the Capital Market Authority (CMA) issued joint statements warning against trading in virtual currencies like Bitcoin, citing their high-risk nature, volatility, and potential for use in illicit activities. These warnings emphasized that cryptocurrencies are not recognized as legal tender in the Kingdom and that no specific protections are offered to traders. Banks were also reportedly restricted from processing cryptocurrency-related transactions.

This cautious approach has persisted, with SAMA and the CMA reiterating warnings about the risks of cryptocurrency investment and speculation. The Ministry of Finance also issued a similar warning in 2019. These official pronouncements highlight the lack of government supervision and the potential for significant financial losses.

Lack of Specific Regulation and Licensing:

As of early 2025, Saudi Arabia has not enacted specific legislation to govern cryptocurrencies or crypto-asset service providers for the retail market. This means there is no formal licensing regime for cryptocurrency exchanges specifically catering to individual traders, nor are there explicit rules tailored to cryptocurrency transactions, such as specific tax laws. The operation of cryptocurrency exchanges is not officially permitted.

AML/CFT Framework:

While there are no crypto-specific regulations, Saudi Arabia has a robust Anti-Money Laundering (AML) and Counter-Terrorist Financing (CFT) framework. The Anti-Money Laundering Law and the Law on Combating Terrorist Crimes and its Financing, along with their implementing regulations, are in place. Although these laws do not explicitly mention crypto assets in detail, the implementing regulations of the CFT law include "electronic currencies" under financial activities, which is generally understood to encompass digital currencies. Businesses facilitating virtual asset exchanges are expected to comply with AML/CFT regulations, including customer due diligence (CDD) and suspicious transaction reporting (STR). This implies that any entity, even if operating in a gray area, would likely fall under these general financial crime prevention measures. Banks are also expected to prevent transfers to offshore crypto sites.

Current Developments and Ambiguity:

Despite the historical warnings and lack of a clear regulatory framework, there are indications of an evolving landscape. Saudi Arabia is actively exploring blockchain technology and Central Bank Digital Currencies (CBDCs), such as its involvement in Project Aber with the UAE and more recently Project mBridge. SAMA has also established a fintech sandbox to allow experimentation with new financial technologies, including some blockchain-based solutions, albeit on a limited and controlled basis. The CMA has also explored FinTech ExPermits for activities involving security tokens, indicating an interest in understanding and potentially regulating certain aspects of the digital asset space.

There's a growing interest in cryptocurrencies among the Saudi population, particularly the youth, with significant trading volumes reported, often through international platforms. This grassroots adoption occurs despite the official cautionary stance. Some sources suggest that while financial institutions are prohibited from crypto transactions, individual ownership and trading are not explicitly banned, though highly discouraged and without legal protection. Others state that trading is considered illegal based on the 2018 warnings. This discrepancy contributes to the "Gray-Zone" status.

The Saudi government is reportedly in discussions with industry players and other regulators to explore potential regulatory frameworks for digital currencies. This suggests a move towards a more defined, albeit likely still cautious and controlled, approach in the future. The appointment of a dedicated head for virtual assets and CBDC initiatives within SAMA further signals this evolving interest.

Conclusion on "Gray-Zone" Status:

The "Gray-Zone" status is appropriate because:
* No Explicit Ban on Individual Holding/Trading (but strong discouragement): While authorities strongly warn against it and financial institutions are restricted, there isn't a clear law explicitly criminalizing the act of an individual buying, selling, or holding cryptocurrencies. However, some interpretations of the 2018 decree suggest it is illegal.
* Lack of Legal Recognition and Regulation: Cryptocurrencies are not legal tender, and there are no specific regulations or licensing frameworks for retail crypto trading platforms. This means no investor protection mechanisms specific to crypto are in place.
* Official Warnings and Restrictions on Financial Institutions: SAMA and CMA have consistently warned the public about the risks, and banks are prohibited from facilitating crypto transactions.
* Ongoing Exploration and Potential Future Regulation: The authorities are actively researching digital assets and CBDCs, and there are discussions about developing a regulatory framework, indicating the current situation is not static but rather in a state of flux.
* Actual Usage by Residents: Despite the official stance, a notable portion of the population engages in cryptocurrency trading, typically through offshore exchanges.

This combination of factors – no outright individual ban but strong official disapproval, lack of a clear legal framework alongside existing general financial crime laws, and an evolving official approach – places retail cryptocurrency trading in a "Gray-Zone" in Saudi Arabia. Individuals engaging in such activities do so with significant risk and without the protections afforded by a regulated environment.

3. Specific, Relevant Text Excerpts

  • Library of Congress Blogs (January 14, 2025): "As of December 2024, Saudi Arabia has not enacted specific legislation governing cryptocurrencies. While it is not explicitly prohibited, cryptocurrencies lack formal legal recognition and are operated under a risk-averse regulatory framework by the Saudi Central Bank, formerly known as the Saudi Arabian Monetary Authority (SAMA), and the Capital Market Authority (CMA). SAMA has issued several warnings about the risks associated with cryptocurrencies."
  • Library of Congress Blogs (January 14, 2025): "While individual ownership and trading of cryptocurrencies are not explicitly banned, they are not traded by local financial institutions as they are not recognized by legal entities in Saudi Arabia."
  • Coinfomania (June 24, 2025): "Saudi Arabia is crypto-cautious. The Saudi Central Bank (SAMA) and Capital Market Authority (CMA) stated in 2018 that it is illegal to trade in digital currencies such as Bitcoin in the country. But change is in the air. The government has been keen on trying out blockchain, central-bank digital currencies (CBDCs), and tokenised finance, but only on a very regulated basis. Personal crypto trading is not encouraged, yet certain controlled experiments and pilot projects are tolerated."
  • Coinfomania (June 24, 2025): "In August 2018, the government formally prohibited cryptocurrencies because of fear of fraud and capital flight. Saudi banks started to block crypto exchange transactions."
  • AInvest (June 24, 2025): "Saudi Arabia has maintained a cautious stance towards cryptocurrencies, with the Saudi Central Bank (SAMA) and Capital Market Authority (CMA) declaring in 2018 that trading in digital currencies such as Bitcoin is illegal within the country. However, there are signs of a shifting regulatory landscape... Personal crypto trading is discouraged, yet certain controlled experiments and pilot projects are permitted."
  • ICLG.com (July 11, 2024): "Cryptocurrency: SAMA has not recognised crypto-currencies as legal tender. Consequently, the operation of cryptocurrency exchanges or the facilitation of cryptocurrency transactions is not officially allowed in Saudi Arabia. However, SAMA is actively engaged in discussions with major industry players... to explore regulatory frameworks for digital currencies."
  • Traders Union (June 20, 2025): "Saudi Arabia has taken a cautious but evolving approach to cryptocurrency regulation. While digital assets are not officially recognized as legal tender, the Saudi Arabian Central Bank (SAMA) has warned of the risks associated with them while exploring blockchain applications. The country does not outright ban cryptocurrency trading, but financial institutions are prohibited from engaging in such transactions."
  • Binance (March 4, 2025): "Saudi Arabia: Status: Cryptocurrencies are not recognized as legal tender. In 2018, the Central Bank of Saudi Arabia (SAMA) issued a warning about the risks of trading cryptocurrencies, and in 2021, it tightened its ban on financial transactions with them. Regulation: There is a complete ban on the use of cryptocurrencies in the banking system. Private ownership is not prosecuted, but trading and exchange are severely restricted."
  • Capital Market Authority Saudi Arabia (Undated, accessed June 2024): "The Capital Market Authority (CMA)affirmed that investment, speculation and participation in the digital currencyinitial offers involve high risk, including risk of capital loss and fraud, aswell as market risks associated with high volatility in digital currencyprices, and uncertainty about its valuation, in addition to the difficulty ofprotecting investors as it being out of the Kingdom of Saudi Arabia's scope ofcontrol."
  • ResearchGate (Published paper, data likely pre-2024): "In 2018, the Saudi Arabian Monetary Authority (SAMA), the country’s central bank, issued a statement warning against the risks associated with cryptocurren- cies, stating that they are not accepted in the country as legal money and that there are no regulating laws to monitor their usage."
  • Journal of Ecohumanism (2025, referencing earlier information): "In Saudi Arabia context of digital assets regulation lacks clarity and major cryptocurrencies such as Bitcoin are in a gray area without clear definitions yet... but there are no specific legal penalties for individuals engaging in digital asset trading. So, the government has also banned banks from processing crypto transactions since trading in cryptocurrencies is illegal and risky."

4. Direct, Accessible URL Links to Sources

  1. Library of Congress Blogs - FALQs: Regulation of Cryptocurrencies in the Gulf Cooperation Council Countries – Part One (January 14, 2025): https://blogs.loc.gov/law/2025/01/falqs-regulation-of-cryptocurrencies-in-the-gulf-cooperation-council-countries-part-one/ (Note: While the URL suggests a 2025 publication, the content refers to information "As of December 2024". The search result indicates the blog was accessed or updated recently.)
  2. Coinfomania - Cryptocurrency Regulations in Saudi Arabia (June 24, 2025): https://coinfomania.com/cryptocurrency-regulations-in-saudi-arabia/
  3. AInvest - Saudi Arabia Explores CBDCs Amid Crypto Ban (June 24, 2025): https://www.ainvest.com/news/saudi-arabia-explores-cbdcs-amid-crypto-ban-2631000536/
  4. ICLG.com - Fintech Laws and Regulations Report 2024-2025 Saudi Arabia (July 11, 2024): https://iclg.com/practice-areas/fintech-laws-and-regulations/saudi-arabia
  5. Traders Union - Saudi Arabia Crypto Regulations & Taxes (June 20, 2025): https://tradersunion.com/interesting-articles/saudi-arabia-crypto-regulations-taxes/
  6. Binance - Current status in key Islamic countries regarding cryptocurrency regulation (March 4, 2025): https://www.binance.com/en/square/post/5313900300019
  7. Capital Market Authority Saudi Arabia - Saudi Arabia Capital Market Authority Warns Investors Against Digital Currency Investment (Undated, accessed from Proshare NG): https://www.proshareng.com/news/Bitcoin%20Market/Saudi-Arabia-Capital-Market-Authority-W/37458
  8. ResearchGate - Bitcoin Cryptocurrency and Electronic Commerce in Saudi Arabia (Paper published, specific date of underlying data varies): https://www.researchgate.net/publication/372132338_Bitcoin_Cryptocurrency_and_Electronic_Commerce_in_Saudi_Arabia_A_Correlational_Study
  9. Journal of Ecohumanism - The Legal Nature of Cryptocurrencies: Analyzing Potential Regulatory Approaches in the United Arab Emirates and the Kingdom Saudi Arabia (2025, specific underlying data may be earlier): https://ecohumanism.co.uk/joe/ecohumanism/article/view/6067
  10. Money Laundering in Saudi Arabia: New Digital Economy Brings Stricter AML Rules (March 24, 2025): https://sumsub.com/blog/money-laundering-in-saudi-arabia/
  11. The legal status of cryptocurrencies in Saudi Arabia and Qatar - Cointelegraph (April 10, 2024): https://cointelegraph.com/news/legal-status-cryptocurrencies-saudi-arabia-qatar
  12. Crypto in Saudi Arabia: Balancing Caution with Innovation - شركات مباشر (April 17, 2025): https://www.mubasher.info/news/4134984/Crypto-in-Saudi-Arabia-Balancing-Caution-with-Innovation/
  13. The State of Crypto in KSA: Trends and Opportunities in 2025 - BingX Blog (March 11, 2025): https://bingx.com/en-us/blog/the-state-of-crypto-in-ksa-trends-and-opportunities-in-2025/
  14. AML/CFT compliance in Saudi Arabia - Arctic Intelligence (Undated, accessed June 2024): https://arctic-intelligence.com/aml-cft-compliance-in-saudi-arabia/
  15. What is KYC? And why do crypto exchanges in Saudi Arabia need KYC? - DrZayed on Binance Square (October 13, 2024): https://www.binance.com/en/square/post/158580
  16. Cryptocurrency and criminal liability: investigating legal challenges in addressing financial crimes in decentralized systems - Emerald Insight (May 13, 2025): https://www.emerald.com/insight/content/doi/10.1108/JMLC-07-2024-0110/full/html
  17. The Future of Cryptocurrency in the Gulf Cooperation Council Countries - Carnegie Endowment for International Peace (May 21, 2025): https://carnegieendowment.org/2025/05/21/future-of-cryptocurrency-in-gulf-cooperation-council-countries-pub-92093
  18. What is KYC? Why do cryptocurrency platforms in Saudi Arabia require KYC? - AlhemairyM on Binance Square (November 11, 2024): https://www.binance.com/en/square/post/213509
  19. Best Exchanges in Saudi Arabia (2025) - UEEx Technology (April 15, 2025): https://ueex.com/en/blog/best-exchanges-in-saudi-arabia-2025-b1020015/
  20. GCC needs common policy on crypto, says Saudi academic - AGBI (February 5, 2025): https://www.agbi.com/analysis/finance/2025/02/gcc-needs-common-policy-on-crypto-says-saudi-academic/
  21. CMA starts receiving security token-based fintech business models - Argaam (October 4, 2022): https://www.argaam.com/en/article/articledetail/id/1592312
  22. KSA Capital Market Authority to apply Blockchain - Legalico (June 14, 2020): https://legalico.com/ksa-capital-market-authority-to-apply-blockchain/
  23. Shaping the Digital Future: Crypto Regulations in the Middle East - GMO-Z.com Trust Company on Medium (November 16, 2023): https://medium.com/@gmo-z.comtrustcompany/shaping-the-digital-future-crypto-regulations-in-the-middle-east-17370817117c
  24. Saudi Arabia Emphasizes Measured Approach to Cryptocurrency Innovation - AInvest (June 22, 2025): https://www.ainvest.com/news/saudi-arabia-emphasizes-measured-approach-to-cryptocurrency-innovation-2631000536/
  25. Capital Market Overview - Saudi Exchange (Undated, accessed June 2024): https://www.saudiexchange.sa/wps/portal/tadawul/knowledge-center/capital-market-overview?locale=en

Web Sources (23)

Sources discovered via web search grounding

Search queries used (7)
  • Saudi Arabia retail cryptocurrency trading status 2024 2025
  • Saudi Central Bank cryptocurrency regulations
  • Capital Market Authority Saudi Arabia crypto guidance
  • Is cryptocurrency trading legal for individuals in Saudi Arabia?
  • KYC/AML regulations for crypto exchanges Saudi Arabia
  • Official statements on cryptocurrency in Saudi Arabia 2024 2025
  • History of cryptocurrency regulation in Saudi Arabia
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