Cryptocurrency Warning Issued By Saudi Arabia

News, Regulation | February 13, 2018 By:

The Capital Market Authority of Saudi Arabia has issued a warning on cryptocurrencies amid growing promotional activities related to crypto investments in the region.

The CMA warned that investment, speculation, and participation in the cryptocurrency space involve high risk, including risk of capital loss and fraud, as well as market risks associated with high volatility in cryptocurrency prices. It added that it would be difficult to protect investors because there is no monetary oversight inside Saudi Arabia over cryptocurrencies.

The regulator said the risk of high price volatility and fraud are the most important considerations regarding crypto investments. CMA explained that as the crypto entities are not subject to any supervisory and surveillance authority, investors faces risk of fraud.

“Many of those websites claim that they are licensed bodies for investments and speculation in cryptocurrencies,” the regulator said. “They tend to sign fake contracts and request to transfer funds to unknown parties. This act also involves operational risks resulting from the possibility of electronic and cyber penetration.”

Due to the limited information available to investors about such investments and the lack of supervision and control of the CMA, it is vital to conduct thorough due diligence before investing in any crypto-related investments to avoid falling victim to a scam.

Crypto mania has not swept Saudi Arabia to the same degree as it has in South Korea and China, where regulators have taken more concrete action. But local officials said they are paying close attention to the space.

Last month, CMA chairman Mohammed El Kuwaiz said the government was working on an official policy for cryptocurrencies, but a ban is unlikely.