Cryptocurrencies are now posing high risks for investors in the digital asset market. Saudi Arabia has taken notice, and a joint committee comprised of regulatory bodies even issued a statement.
It went on to comment on the overall speculative nature of cryptocurrencies:
“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 committee came together due to a supreme decree made with the goal of investigating all risks associated with not just digital currencies, but with foreign exchange trading as well. Its goal is to shut down platforms that inflate these risks through any related practice within Saudi Arabia.
Saudi Arabians continue to be warned of the many dangers associated with the trading of digital currencies which include high volatility, anonymity, and its use in fraudulent activities. These are the things the joint body is working to reduce or eliminate. For any doubts on the legality of certain establishments, investors can refer to the government websites to check which ones are licensed.
The team is comprised of several members of the nation’s CMA (Capital Market Authority) namely The Ministry of Commerce and Investment, The Ministry of Interior, The Ministry of Media, and The Saudi Arabian Monetary Authority (SAMA).
Despite the efforts made by the joint committee, there are still unregulated establishments that allow for Saudi Arabians to trade these digital currencies. Furthermore, these establishments are even making claims of being allowed by domestic authorities to operate. These claims were soon found to be false.
Saudi Arabia and The Blockchain
Blockchain technology and cryptocurrencies were not always frowned upon by Saudi Arabia. Earlier in February 2018, Saudi Arabian bank Al Rajhi did a successful trial run using Ripple’s technology. It was used to send cross-border payments to Jordan and between branches of banks. That month, the Central Bank also signed an agreement with Ripple so the technology can make cross-border transactions easier for other banks as well.
However, as the committee continues to operate, more and more unlicensed establishments continue to exist, and its hand is forced to keep a watchful eye.