The Saudi Arabian officials remind the citizens once again that cryptocurrency trading is illegal, following the recent promotions of digital trading by series of websites.
The officials have once again issued warnings against trading and investment in cryptocurrency. The virtual currencies such as Bitcoin and Ethereum were being promoted by different websites and social media channels, claiming that they were authorized to operate in the country. In a move to block such strict stance on cryptocurrency trading, it is a move to protect the local investors with the high risks namely fraud and unauthorized payments associated with the cryptocurrency market.
Following the recent promotions, the special committee released a statement on August 12th, 2018 stating:-
“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 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 the signing of fictitious contracts and the transfer of funds to unknown recipients/entities/parties.”
The committee reiterates that the trading in virtual currency, for example, Bitcoin, Ethereum is illegal in the Arab Nation. The committee maintains that no party or individual have been given a license to offer virtual currency trading. No individuals or parties are exempt from the ban. They have also warned the citizens and residents about crypto trading terming it as highly risky. The committee further warned against trading in the digital currency as it has negative consequences and puts a high risk on traders as government control is not exercised on it. The speculative nature of the crypto trading, as well as high possibilities of being involved in scam or fraud, makes it highly risky.
There is a high possibility of investors losing all their money as they might end up signing false contracts or transfer their money to unknown recipients. Many other countries have also maintained a strict stance on crypto trading and declared it as an illegal move.
“The standing committee warns against trading in the digital currencies or what is known as virtual currency for their negative consequences and high risks on traders as they are out of government supervision.”
However, the official statement has not highlighted the consequences for the parties indulged in the crypto trading.
Digital trading in the Middle East
Although crypto trading is illegal in Saudi Arabia, it is gaining popularity in the Middle East. Stellar, the seventh-largest cryptocurrency by market cap is a unique and decentralized value exchange protocol. In July 2018, Stellar became the first cryptocurrency to comply with the Islamic financing principles, getting a Sharia compliance certification. It has integrated with the Middle Eastern financial institutions.
Stellar can be used for making cross-border transactions and asset digitization. It is targeting the remittance market in the region. By using the Lumens (XLM), the users will be able to send money across borders in an affordable manner.
However, due to this ban, Saudi Arabia won’t be able to get any benefits from Stellar’s integration with the financial firms.