In an interesting crypto turn of fate, a committee headed by the Saudi Arabian Capital Market Authority has said that Bitcoin trading is illegal. However, the committee does have its own reasons behind the move – Sharia compliance. The Middle East’s entire financial sector has to be Sharia compliant, and virtually all cryptocurrencies haven’t been certified as such – at least as of yet. While the committee has said that all cryptos are illegal to trade, Stellar (XLM) is the only certified Sharia-compliant crypto currently in existence.
Concerns Over Illegal Activities
One reason the committee gave for the decision was that cryptos are being used for illegal activities. While this is true to a certain extent, the DEA has said that the percentage of illegal transactions performed in cryptos is down 80% from the level seen in 2014. By implementing stringent KYC processes, governments and organizations can monitor crypto activities and prevent cryptos from being used for illegal means. The very same KYC has been implemented in America by a handful of candidates running in the 2020 elections, most notably Presidential candidate Andrew Yang.
On the one hand, the government has publicly said that it is looking into a joint crypto-venture with the UAE for cross-border payments, but then it releases a committee report that says crypto is bad. This could mean that the government still isn’t totally sure about the whole industry and is taking steps to keep its citizens safe while it decides the best way to go about matters. In its partnership with the UAE, the Kingdom plans to create a digital currency for cross-border payments, similar to Ripple. There is a high chance that it could also be pegged to the value of oil, similar to the Petro in Venezuela.
Ripple Working with Central Bank of Saudi Arabia
While many crypto enthusiasts don’t believe Ripple is a cryptocurrency and should instead be listed as a security, its platform is still proving to be quite popular. A number of banks around the world have started using its xRapid distributed ledger technology to speed up cross-border payments and reduce costs. The Central Bank of Saudi Arabia has teamed up with Ripple for the same purpose and has implemented the xRapid platform to ensure cross-border payments are quick, cheap, and tracked end-to-end. This technology has enabled the bank to provide its customers with market-leading transaction speeds at a fraction of the cost.
Saudi Arabia still has a lot of ground to cover regarding the status and legality of cryptos, as other countries are making leaps in terms of crypto acceptance. Recently Malta passed three crypto-friendly bills into law and South Korea announced crypto classifications to spur on crypto activities in their respective countries. Hopefully, it won’t be too long before the Kingdom sheds some light onto its decision.