Saudi Arabia is working on an official policy for bitcoin but a ban is unlikely

Riyadh Saudi Arabia

Saudi Arabian officials are working on the country's bitcoin policy, according to a top regulator.
A ban on cryptocurrencies is not likely.

Regulators around the world are taking a closer look at cryptocurrencies. South Korea's ban on anonymous bitcoin trading accounts went into effect Tuesday while the US Securities and Exchange Commission halted a $600 million initial coin offering.

But one country's regulators are taking a more laissez faire-approach to cryptocurrencies: Saudi Arabia.

The country isn't typically associated with the market for digital coins, but one top Saudi financial regulator told Business Insider that officials there are paying close attention to the space. However, they have not taken any steps to hinder activity in the market.

"Not unlike most other markets, the regulators in Saudi have been following developments with cryptocurrencies with great interest," Mohammed ElKuwaiz, the chairman of Saudi Arabia's Capital Markets Authority, said in an interview with Business Insider.

"We are still evaluating what our appropriate regulatory response should be," he added. "I think we are likely to come up with something very soon."

A ban on cryptocurrencies, ElKuwaiz said, is not likely.

Bitcoin mania has not swept the country to the same degree as it has in South Korea and China, where regulators have taken more concrete action.

Still, a number of cryptocurrency companies claim to offer services for residents of the kingdom. One such company is Paxful, which says it has sold over 10,0000 bitcoin in the country. Another is BitOasis, which serves users across the Middle East and North Africa.

Also, it was reported by cryptocurrency watcher CoinDesk in December that the central banks in Saudi Arabia and the United Arab Emirates launched a pilot program to test how a new digital currency could be used to facilitate cross-border payments.

"It is an emerging field and one would like to see any new field develop before jumping in," ElKuwaiz said.

The country's financial regulators are taking that approach in other areas of financial technology. For instance, regulators have launched a sandbox program to provide firms working in innovative tech an opportunity to develop products without having to worry about regulations.

"Essentially, companies are issued a provisional license over a test and pilot period in order to test their ideas," he said. "After the pilot period, we can then jointly agree to fit it into the existing regulatory regime or build a regulatory regime around it."

The UK has a similar program operated by the watchdog Financial Conduct Authority that seeks to allow "businesses to test innovative products, services, business models and delivery mechanisms in the real market, with real consumers."

Saudi Arabia, which has been trying to shake off a reputation as an economy purely powered by energy companies, is taking a number of steps to attract foreign investors and spur developments in finance and capital markets. Most notably, under its Vision 2030 plan, it is set to sell 5% of oil giant Saudi Aramco in an initial public offering.

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