Saudi Arabia has many restrictions on various aspects of life. Now there's another one as their standing committee made up of many government ministries along with their central bank has issued a warning that unauthorised cryptocurrencies such as Bitcoin is illegal in the Arab nation.
Saudi Arabian Monetary Authority has released a statement to this effect.
The standing committee for awareness on dealing in unauthorized securities activities in the foreign exchange market (Forex) warns: “The unauthorized virtual currencies are illegal inside the kingdom of Saudi Arabia”
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. 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 signing of fictitious contracts and the transfer of funds to unknown recipients/entities/parties. .
It is noteworthy, that the standing committee which was formed by the supreme decree headed by Capital Market Authority (CMA), Ministry of Ministry of Interior membership, Ministry of Media, Ministry of Commerce and Investment and Saudi Arabian Monetary Authority (SAMA). As required by the supreme decree, the standing committee works with relevant parties in order to reduce marketing for investment and trading in Forex and virtual currencies by reporting on SAMA or CMA official websites.
So basically it seems as though Saudi Arabia must have seen it's share of MLMs or Ponzi schemes or perhaps its the crazy volatility experienced in this domain which is beyond the control of any government supervision seems to have pushed them into making such as hasty decision.
But as it turns out SAMA is building it's own custom cryptocurrency for cross border transactions with UAE's central bank according to CCN. But it's interesting to note that their central bank is using Ripple's xCurrent software built on blockchain technology.
I'm sure many of you in India are wondering about the status of Bitcoin and cryptocurrencies in our own country. India has not banned cryptocurrencies and neither has RBI. The central bank in India has only directed its licensed banks to not provide banking services to cryptocurrency exchanges in India.
If you are interested in learning more about p2p in India you can read this post and to further understand the legality of cryptos in India read this!
Overall this move from Saudi Arabia seems shortsighted. The middle east is grappling with the possibility of life after oil by investing in futuristic technologies to future-proof itself as its oil reserves continue to reduce. So, this move comes as a bit of a shock that their government isn't mature enough to be open-minded about decentralised blockchains and cryptocurrencies such as Bitcoin.
Saudi Arabia and many middle eastern countries have several migrants from various countries especially India. This move will hinder everyone's ability to purchase and sell Bitcoin. Although the government at this point in time hasn't imposed any specific penalties for trading in Bitcoin. Hopefully it won't be as extreme as being flogged in public or worse!
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