Financial Institutions Crypto Warning in Saudi Arabia: What Banks Are Forbidden to Do

When you hear that a country warns its banks not to touch cryptocurrency, it’s not just a suggestion-it’s a legal boundary. In Saudi Arabia, that boundary is clear: financial institutions are forbidden from dealing in cryptocurrencies. This isn’t a rumor or a guideline. It’s a firm stance backed by official warnings from the country’s top financial regulators, repeated over several years and reinforced by government ministries.

Why Saudi Arabia Warned Its Banks

The Saudi Arabian Monetary Authority (SAMA), now known as the Saudi Central Bank, issued its first official warning about cryptocurrencies in 2017. At the time, Bitcoin and other digital coins were surging in global popularity, and some local businesses were starting to accept them. But Saudi regulators saw danger. They didn’t see innovation-they saw risk. No oversight. No accountability. No legal protection for consumers. And crucially, no clear alignment with Sharia law, which governs finance in the Kingdom.

By December 2018, the warning got sharper. A joint committee including SAMA and the Capital Market Authority (CMA) declared virtual currencies “illegal and unlicensed.” That wasn’t a vague caution. It was a red line. Financial institutions-banks, investment firms, payment processors-were told outright: don’t touch this. Don’t hold it. Don’t trade it. Don’t offer it to customers. Don’t even advertise it.

The Ministry of Finance added weight to that warning in 2019, stating clearly that cryptocurrencies are “neither legally recognized nor regulated by any official entities in Saudi Arabia.” That means if you lose money trading Bitcoin through a Saudi bank, you have no recourse. If a bank gets hacked because it stored crypto, it’s on them. No safety net. No insurance. No legal standing.

What Exactly Are Financial Institutions Forbidden From Doing?

The rules aren’t ambiguous. Here’s what Saudi banks and financial firms cannot do:

• Accept cryptocurrency as payment for services or goods
• Hold cryptocurrency in any form-wallets, custodial accounts, or reserve funds
• Offer crypto trading platforms or investment products tied to digital assets
• Process transactions involving cryptocurrency exchanges
• Market or promote any crypto-related service to customers

The penalties for breaking these rules aren’t just fines. They include legal action, suspension of licenses, and reputational damage. SAMA has also made it clear that any entity using Saudi Arabia’s national symbols-like the flag or royal crest-in crypto marketing will be prosecuted. That’s not just about compliance. It’s about protecting the state’s image.

But Crypto Is Still Popular in Saudi Arabia

Here’s the contradiction: while banks are banned, regular people are buying crypto anyway. Saudi Arabia is the second-largest crypto market in the Middle East, behind only the UAE. And it’s growing fast. Why? Because 63% of the population is under 30. Young Saudis are tech-savvy, skeptical of traditional banking, and drawn to the idea of decentralized finance.

Many use peer-to-peer apps, offshore exchanges, or VPNs to bypass restrictions. Some trade on platforms like Binance or Kraken, which don’t verify users’ locations. Others use local peer-to-peer marketplaces where buyers and sellers meet in person or via messaging apps. There’s no official data on how many Saudis hold crypto, but estimates from industry analysts suggest millions are active.

This creates a dangerous gap. The government warns banks to stay away-but doesn’t stop individuals from trading. That means people are exposed to scams, fraud, and market crashes without any legal protection. And because these transactions happen outside the banking system, there’s no way for authorities to track them for money laundering or terrorist financing.

Why Doesn’t Saudi Arabia Just Legalize It?

It’s not that Saudi Arabia hates technology. On the contrary, it’s investing billions in blockchain. The government launched Project Aber in 2019-a joint central bank digital currency (CBDC) initiative with the United Arab Emirates. This isn’t Bitcoin. It’s a digital version of the Saudi riyal, controlled entirely by the central bank. It’s designed for secure interbank transfers and cross-border payments.

They’re also encouraging tokenization-turning traditional assets like bonds, real estate, or trade invoices into digital tokens on a blockchain. Goldman Sachs and Rothschild are already working on these projects in Saudi Arabia. These aren’t cryptocurrencies. They’re regulated, audited, and tied to real-world value. The key difference? They’re under SAMA’s control.

So why not let Bitcoin in? The answer lies in Sharia law. Islamic finance prohibits speculation (gharar), gambling (maysir), and interest (riba). Many scholars argue that Bitcoin’s extreme volatility and lack of intrinsic value make it a form of gambling. Others say it’s just a tool-neutral until used. But the official position hasn’t shifted. Until there’s a unified religious and legal consensus, the ban stays.

The Gray Area: Is Crypto Illegal or Just Unregulated?

There’s a legal nuance that trips up even experts. Saudi Arabia hasn’t passed a law that says “cryptocurrency is illegal.” Instead, it’s built a wall around it by refusing to recognize it. The Anti-Money Laundering Law (AML) and Counter-Terrorism Financing Law (CFT) define “funds” broadly to include any digital asset. That means if someone uses crypto to launder money, they can still be prosecuted. But if someone just buys Bitcoin for investment? There’s no law protecting them-and no law saying they’re breaking the rules.

This creates a gray zone. For banks? Clear prohibition. For individuals? Legal ambiguity. For regulators? Awaiting a decision.

What’s Next for Crypto in Saudi Arabia?

The signs point to a future where crypto doesn’t disappear-but it won’t look like what you see in the U.S. or Singapore. Saudi Arabia is building a parallel system: one where blockchain powers finance, but only under strict state control. Think of it like this: they’re okay with digital money, as long as it’s their digital money.

In the next few years, we may see:

• Official Saudi CBDC rollout for retail use
• Regulated tokenized assets (bonds, stocks) traded on licensed platforms
• Strict licensing for crypto-related businesses that meet Sharia compliance standards
• Final religious rulings from top scholars on whether Bitcoin is halal or haram

But don’t expect Saudi banks to start offering Bitcoin wallets anytime soon. The warnings from 2017 to 2019 still stand. And until the government says otherwise, those rules are binding.

What Should You Do If You’re in Saudi Arabia?

If you’re a resident or citizen:

• Don’t use your bank account to buy or sell crypto. It’s risky and could trigger scrutiny.
• Understand that you have zero legal protection if you lose money.
• Be careful with peer-to-peer trades-scams are common.
• If you’re a business owner, don’t accept crypto as payment. It’s a violation of SAMA rules.

If you’re a financial professional working in Saudi Arabia:

• Train your team on the official prohibitions.
• Don’t develop crypto products-even if clients ask.
• Watch for changes in the CMA or SAMA announcements-they’re the only legal authorities that matter here.

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