Saudi Arabia was earlier reluctant to boost the wider adoption of cryptocurrencies. Since the government or any government officials did not back it, the region’s citizens were advised not to indulge in the exchange or trading of digital assets.
Another factor that contributed to suppressing the growth of cryptocurrencies was the religious angle. Several Islamic Scholars have tagged cryptocurrencies haram by comparing it with gambling due to their high volatility.
Nevertheless, citizens continued to explore the space, and the numbers now stand at 14% of the population engaged in the crypto economy.
Saudi Arabia also seems to have grown fond of digital currency. The region has taken a fresh approach by appointing Mohsen AlZahrani to lead the central bank’s virtual assets and digital currency program – The Saudi Central Bank (SAMA).
2018 is when citizens were precisely warned against the negative consequences of cryptocurrencies. The move was, in a way, right as there was no government intervention and regulation. The aim was to protect the citizens from potential harm. Citizens also wanted not to pursue the illusion of getting rich schemes that involved cryptocurrencies.
Before 2018, Assim al-Hakeem, a prominent Saudi cleric, had prohibited cryptocurrency under Islamic Law in 2017 by citing ambiguity as a reason.
Nothing came to force as the market continued to increase with a larger number of citizens participating in the digital economy. Estimates quote that nearly 14% of the adult population between 18 and 60 owns cryptocurrency or has traded in crypto in the past six months. The number is expected to rise further by 17%.
Around 70% of the population in the region is below 30 years. Meaning that there is a chance they will be inclined to give crypto a shot in their life.
SAMA is, therefore, looking for a way to gain at least some control over the crypto market and protect its citizens. There lies a probability that the wider adoption will take some time.
Blockchain technology has always attracted attention from individuals and private enterprises. It carries a better chance of getting a green signal as the technology can also be deployed for non-crypto utilities.
Mirza Mahmood ul Hasan, the Managing Director of Fiduciam Global, shared that there is a massive interest in blockchain technology, which drives the interest in cryptocurrencies. Crypto gambling is far from the picture, but crypto trading could soon be a reality.
Volatility is a part of the cryptocurrency, but that could soon be controlled once a trend is identified and traders are notified how they can be more careful with their investments.
Another factor that could have encouraged Saudi Arabia to change its perspectives toward cryptocurrencies is the UAE’s success in the sector by offering a favorable regulatory environment.
Saudi Arabia and the UAE have often been described as rival allies in trade and investment; however, there are a few similarities regarding macro events. Motivations could have been different, but both regions could mirror the outcome post the adoption of cryptocurrencies.
A shift in the approach by Saudi Arabia has strengthened the belief of the crypto community that the wider adoption is not as fast as they think it is. A little more time and a little more number of attempts to take crypto on a global level.