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.
Historical Context
Cryptocurrencies existed in a legal grey area between 2013 and 2017. In August 2018, the government formally prohibited cryptocurrencies because of fear of fraud and capital flight. Saudi banks started to block crypto exchange transactions.
In 2019, Saudi Arabia became a partner of the UAE in the CBDC project known as Project Aber to test cross-border transactions based on blockchain.
In 2024, the government hired Mohsen Al-Zahrani to head the virtual assets and CBDC initiatives in the country, demonstrating its increasing interest in government-controlled digital currencies, as opposed to decentralized cryptocurrencies.
Regulatory Framework
Key authorities
Saudi Central Bank (SAMA) – monetary policy, fintech sandbox, CBDC initiatives.
Capital Market Authority (CMA) securities watchdog that will most likely license any offerings of tokens in the future.
Permanent Committee on Unauthorized Forex & Virtual Assets – an inter-agency committee that also sends out public warnings and watchdogs illegal promotions.
Licensing & registration
There are no exchanges, custodians, or ICO platforms with full licences issued in Saudi Arabia. Sandbox cohorts are given a temporary and limited scope license by SAMA to test blockchain products with tight limits on the number of users, volumes and time.
AML / KYC
Sandbox members are required to exercise complete customer due diligence, submit Suspicious Transaction Reports and incorporate Saudi-specific digital-identity systems. Banks will have to prevent transfers to offshore crypto sites.
Taxation
There is no specific crypto-tax code since trading is not allowed among the retailers. Authorities may seize profits that they find as proceeds of an unlicensed business.
ICOs, STOs and other tokens
The tokens are not supposed to be sold to the public. Any security-token projects have to be approved by the CMA with its sandbox program first. Utility tokens may be utilized only on closed tests and cannot be shared and sold to a wider audience.
Saudi Arabia Crypto Policies
Usage: All onshore crypto payments are illegal; no merchant can accept digital assets in exchange for goods or services.
Mining: Importation of Application-Specific Integrated Circuit (ASIC) rigs and exchange of mined coins into riyal are in defiance of the 2018 decree; equipment can be impounded at customs.
Government initiatives: SAMA is in the process of further internal CBDC testing (Project Aber, mBridge) and is sponsoring permissioned-ledger-based supply-chain pilots as part of the Vision 2030 initiatives.
Penalties: The lack of license to operate an exchange may result in fines and imprisonment as applied in AML and Forex regulations.
The Country’s approach to Crypto Innovation
The Regulatory Sandbox provided by SAMA enables small groups of people to experiment with new solutions such as remittances, tokenized trade finance, and Sharia-compliant blockchain platforms.
These tests tend to be 6 to 12 months in length and are limited in users and transactions in order to maintain control with a view to accumulating data to base regulations on. Most of the local start-ups operate their systems outside of the country and receive research exemptions during the sandbox.
Government-driven experiments dwell on such aspects as interconnecting CBDCs through systems, digital identity wallets, and monitoring oil supply chains with the help of the blockchain in a closed-off form.
Eminent Issues and Challenges
Regulatory uncertainty: The prohibition of retail cryptos, and an innovation sandbox misleads foreign investors.
Enforcement holes: Saudi residents reach foreign exchanges using VPNs, which make it difficult to trace AML.
Perception of the market: The depictions of the media swing between opportunity and threat; 2018 warnings continue to send shivers to the banks and corporations.
Regulatory Trends and Opportunities
The latest development, the 2025 consultation by CMA regarding offshore securities business licences, suggests the developments in token-fund structures and regulated exchanges in the future.
Projection: The analysts anticipate a staged legalisation in two years: graduates of the sandbox will be able to acquire conditional exchange licenses, and on-shore KYC and segregated client-asset requirements will be compulsory. Tax guidance will be likely to follow.
Global influence As a balance between the liberal approach of Bahrain and the ban of Qatar, Saudi moderation would establish an intermediary model of conservative markets in the balance between the use of capital controls and the expansion of fintech.
Conclusion
Nevertheless, the ban on the trade of cryptocurrencies in Saudi Arabia is still not lifted. The fact that the nation is developing sandbox initiatives, experiments with a central bank digital currency (CBDC), and is in negotiations with authorities indicates that it might be shifting toward a highly regulated method of crypto usage.
As a developer and an investor, one should learn the existing laws and penalties and be prepared for changes in policies. The crypto regulations of the country may be subject to rapid change, as Riyadh is trying to reconcile its ambitions of promoting new technology and maintaining the financial system stable.
FAQs
1. Is Bitcoin buying and selling legal in Saudi Arabia?
No. The warning issued by the standing committee of 2018 considers virtual currency trading as illegal, and individuals who breach the rule can face fines or imprisonment.
2. Is it possible to store crypto in a personal wallet and not make any transactions?
Simple possession is not a criminal procedure, but law enforcement normally begins when people start trading or promoting it.
3. What are the legal ways of how Saudi start-ups can test blockchain solutions?
They can apply to the sandbox of SAMA to conduct a pilot with limited time and volume with high reporting and KYC requirements.
4. Is there any licensed crypto exchange in the Kingdom?
There are no permanent licences yet; sandbox pilots do not enable onboarding of the public retail.
5. Is Saudi Arabia a country that taxes crypto income?
A special regime does not exist; whenever any gains are found, they can be considered as proceeds of an unlicensed operation.
6. Is crypto mining acceptable?
The 2018 directive is also violated by mining hardware imports and re-conversion of coins into riyal, which puts miners at risk of sanctions.
7. What are the penalties of operating an unlicensed exchange?
Criminals are liable to multi-million-royal fines, cancellation of business permits, and imprisonment of up to five years.
8. Will Saudi CBDC be coming in the near future?
Project Aber was feasible, and SAMA has not declared a retail launch date; it is still on wholesale pilots.
9. What is the perception of cryptocurrency among the Saudis?
Young, tech-savvy citizens are definitely interested, but the cases of fraud and government warnings ensure that mainstream use remains quiet.
10. Will the legal status change any time soon?
The consultation with CMA and the data in the sandbox indicate that conditional licensing and taxation may be introduced somewhere between 2025 and 2027.
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