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Whilst cryptocurrencies are incredibly challenging for governments in democratic states in terms of regulations, scrutiny, taxation, and illicit operations, in regions of the world that authoritarian regimes rule crypto may constitute as a real threat to the dominating reign. Some such autocratic countries limit and restrict the utilization of crypto within their territories but still attempt to partially integrate it and employ its advantages – for instance, the Chinese government – but others determine that the risk on their absolute authority is just too great, and they completely ban it.
This seems to be the case with the totalitarian monarchy in Saudi Arabia, as an official special standing committee released a cautioning message, warning that crypto-trading is against the law in the kingdom.
The standing committee warns against trading in the digital currencies or what is known as virtual currency for their negative consequences and high risks on traders as they are out of government supervision. The committee assured that virtual currency including, for example but not limited to, the Bitcoins are illegal in the kingdom and no parties or individuals are licensed for such practices. The committee warns all citizens and residents about drifting after such illusion and get-rich scheme due to the high regulatory, security and market risks involved, not to mention signing of fictitious contracts and the transfer of funds to unknown recipients/entities/parties.
Do cryptocurrencies might comprise “negative consequences and high risks”? Of course they are, but so are stocks, bonds, forex, all sorts of derivatives, and not to even mention casinos in Saudi hotels. Does the crypto market also contain fraudulent operations which delivers false income promises, illusions and get-rich schemes? Sure, but completely crooked and deceptive industries such as multi-level marketing seem to operate quite freely in Saudi Arabia.
So why do digital currencies receive harsher treatment? That’s probably primarily due to the “out of government supervision” aspect, which is more acute and sensitive for absolute regimes that constantly have to keep at bay the mere whiff of democratization – political, social, economical or otherwise. And isn’t it the whole idea behind decentralization, which essentially defines crypto?
This recent message is, in fact, an escalation of a previous Saudi policy that did similarly caution against cryptocurrency trading, but did not straightforwardly prohibit it (article in Arabic). Now, it appears that the Saudi monarchy ultimately decided that crypto just couldn’t be sufficiently controlled and commanded.