Financial Institutions Crypto Warning in Saudi Arabia: What You Need to Know

When you hear that financial institutions in Saudi Arabia are being told to stay away from cryptocurrency, it’s not just a cautionary note-it’s a hard line drawn in the sand. The message from regulators is clear: crypto isn’t illegal for individuals, but for banks, exchanges, and investment firms, dealing with Bitcoin, Ethereum, or any digital asset is off-limits. And this isn’t a recent shift. It’s been the rule since 2018.

Why the Warning? It’s Not About Fear-It’s About Control

The Saudi Central Bank (SAMA), which replaced the old Saudi Arabian Monetary Authority, first warned the public about cryptocurrencies in 2017. But the real turning point came in December 2018. A joint committee including SAMA and the Ministry of Finance declared virtual currencies “illegal and unlicensed.” That wasn’t a suggestion. It was a directive.

The reasoning? Three things: no legal backing, no oversight, and no Sharia compliance. Cryptocurrencies aren’t issued by any government, aren’t monitored by any financial authority, and their decentralized nature makes them incompatible with Saudi Arabia’s strict financial governance model. Unlike the UAE, which created clear licensing rules for crypto firms, Saudi Arabia chose to shut the door entirely-especially for institutions.

Banks, brokerage houses, and payment processors are explicitly forbidden from offering crypto services. No wallet storage. No trading platforms. No custody solutions. Even marketing crypto as a financial product using Saudi national symbols can lead to legal action. That’s how seriously they take it.

But Wait-Isn’t Saudi Arabia Building Blockchain Tech?

Here’s where things get confusing. While regular crypto trading is blocked for banks, Saudi Arabia is quietly leading one of the most advanced central bank digital currency (CBDC) projects in the world. Project Aber, launched in 2019 with the United Arab Emirates, is testing a digital riyal and dirham for cross-border settlements between central banks. It’s not Bitcoin. It’s not Ethereum. It’s a government-controlled digital currency, built on blockchain, but fully regulated and traceable.

This isn’t a contradiction-it’s a strategy. Saudi Arabia wants the efficiency of blockchain without the volatility and anonymity of public cryptocurrencies. Major global firms like Goldman Sachs and Rothschild are already working on tokenization projects in the Kingdom, turning bonds, real estate, and trade finance into digital tokens on private blockchains. These aren’t cryptocurrencies. They’re digitized assets under strict SAMA supervision.

Think of it this way: you can’t buy Bitcoin at your local bank, but your bank might soon issue a digital bond that trades on a secure, permissioned network. That’s the future Saudi Arabia is building-controlled, transparent, and Sharia-compliant.

What Does This Mean for Regular People?

The ban doesn’t apply to individuals. You can still buy Bitcoin on international exchanges. You can still hold it in a personal wallet. You can even trade it peer-to-peer. But here’s the catch: if you use a Saudi bank account to fund that trade, you’re breaking the rules. Financial institutions are required to block any transactions tied to crypto exchanges. If they detect one, they must report it.

Despite the restrictions, crypto adoption is surging. Over 60% of Saudi Arabia’s population is under 30, and this young, tech-savvy group is driving grassroots adoption. A 2024 survey by a regional fintech group found that nearly 1 in 4 Saudis between 18 and 30 have bought or traded cryptocurrency in the past year. Many use peer-to-peer platforms, crypto ATMs in shopping malls, or foreign brokers with no Saudi banking links.

The government knows this. But instead of cracking down on individuals, they’ve chosen to block the financial infrastructure that could make crypto mainstream. No local exchanges. No bank integration. No easy on-ramps. It’s a way to contain the trend without fueling it.

The Legal Gray Zone: Is Crypto Illegal or Just Unrecognized?

Legally, it’s complicated. Saudi Arabia has never passed a law that says “crypto is banned.” Instead, they’ve issued repeated warnings. The Anti-Money Laundering Law and Counter-Terrorism Financing Law cover “intangible assets,” which could technically include crypto-but there’s no enforcement framework for it. No KYC rules. No licensing. No penalties specifically for crypto violations.

This creates a gray zone. For institutions, the warning is absolute: avoid crypto or face sanctions. For individuals, there’s no law saying you’ll be arrested for holding Bitcoin. But if you’re caught using a Saudi bank to buy it, your account could be frozen. And if you’re running a crypto business-even a small one-you’re operating outside the law.

Analysts from the Library of Congress describe it as a “risk-averse regulatory framework.” The Saudis aren’t trying to stop crypto forever. They’re trying to control how it enters their system. If it comes through a regulated, state-approved channel-like a CBDC or tokenized asset-it’s welcome. If it comes through decentralized, anonymous networks? Not a chance.

What’s Next? The Slow Road to Regulation

There’s no sign Saudi Arabia will legalize Bitcoin or Ethereum anytime soon. But the door isn’t completely shut. The same institutions that warn against crypto are investing heavily in blockchain infrastructure. The Capital Market Authority (CMA) has signaled openness to regulated digital asset platforms-so long as they’re tied to real-world assets and comply with Islamic finance principles.

One possible path forward? Licensed tokenized securities. Imagine a Sharia-compliant fund that issues digital shares on a private blockchain, tracked by SAMA. That’s not crypto. That’s fintech. And it’s exactly what Saudi Arabia is building.

The real question isn’t whether crypto will be allowed-it’s whether Saudi Arabia will create a version of it that fits their rules. A version where the state controls the ledger, not the network. A version where transparency overrides decentralization.

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

If you’re a resident:

• Don’t use your Saudi bank account to buy crypto. It’s risky and could trigger account freezes.
• Don’t start a crypto exchange or wallet service. You’re breaking the law.
• Don’t assume your crypto holdings are protected. There’s no legal recourse if you’re hacked or scammed.
• Do use international, non-Saudi platforms if you trade. But know the risks.

If you’re a business:

• Stay away from crypto services unless you’re working on tokenized assets under SAMA supervision.
• Explore blockchain for supply chain, trade finance, or asset management-but only through approved channels.
• Don’t market crypto as an investment product. It’s a violation.

Frequently Asked Questions

What This Means for the Future

Saudi Arabia’s approach to crypto isn’t about resisting technology. It’s about controlling it. The country’s youth are embracing digital finance, and the government knows it can’t stop them. But they can stop the institutions that make it easy. By cutting off the financial pipeline, they’re forcing crypto into the shadows-while building their own version of digital money from the top down.

This isn’t a dead end. It’s a detour. And in five years, the digital assets you see in Saudi Arabia might not look like Bitcoin. They’ll look like something the state built-and that’s exactly how they want it.