February 7, 2023

Digital Currency Adoption in Saudi Arabia

Digital Currency Adoption in Saudi Arabia :

According to a recent assessment by cryptocurrency exchange KuCoin, Saudi Arabia has the potential to become a major market for digital currencies. This is due to the country’s supportive regulatory environment, vast consumer base, and growing interest in the sector. However, initially, the Kingdom was not open to the idea of digital currencies. n 2018, the financial authorities in the Kingdom of Saudi Arabia stated “that bitcoin and other cryptocurrencies were illegal because they had “negative effects” and were “high risk.” The Kingdom said that it needed to keep its people safe from themselves. The Kingdom expressed that it must protect its subjects from themselves. Nonetheless, the Saudi Central Bank has taken a number of steps recently that show the Kingdom is becoming more open to the use of cryptocurrency.

Saudi Arabia’s Changing Position on Digital Currency

Saudi Arabia’s changing position on digital currency is evident in the recent appointment of Mohsen AlZahrani by the Saudi Central Bank (SAMA). Mohsen AlZahrani was appointed to oversee its virtual assets and central bank digital currency program. This appointment might signal a shift in the nation’s attitude toward cryptocurrencies, which regulators there have typically viewed with scepticism.

Despite SAMA’s original stance on digital currencies and the lack of a legal way to buy crypto in Saudi Arabia, the number of people exchanging digital currencies in the Kingdom has increased dramatically. The results of a study conducted by KuCoin confirm this. The survey found that as of May 2022, 3 million Saudis, or 14% of the adult population ranging between the ages of 18 and 60, owned or traded crypto assets. Seventeen percent of the people polled said they were “crypto-curious,” which means they might invest in cryptocurrency in the next six months. According to the study’s results, people in Arab countries who might trade cryptocurrencies are in it for the long haul. As of the first quarter of 2022, 59% of people who owned cryptocurrency planned to buy more over the next six months.

A Bloomberg report citing anonymous sources suggested that besides the use of digital currencies by Saudi citizens, the activities related to digital currencies in the UAE may have made officials in Riyadh consider regulating the sector in a formal way. One could say that the UAE becoming the top spot for crypto and blockchain startups may have influenced Saudi officials to think about regulating cryptocurrencies officially.

Takeaways

Even though no formal laws have yet been made in this area, it seems that the Kingdom of Saudi Arabia may now have a positive view of digital assets and blockchain technology. It is also worth mentioning that the Saudi Arabian Monetary Authority (SAMA) and the Central Bank of the United Arab Emirates (UAECB) unveiled a new digital currency, Aber, in 2019. The digital money is backed by the fiat money of both countries, and it will be used to do business across borders.

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