The Standing Committee for Awareness and Warning Against Unlicensed Securities Trading in the Foreign Exchange (Forex) Market, which was established by order of His Highness, against dealing in or investing in virtual currencies, due to the various negative consequences such transactions have on participants and the high risks involved, as they fall outside the scope of regulatory oversight within the Kingdom of Saudi Arabia.
The Committee emphasized that virtual currencies that have recently emerged—including, but not limited to, Bitcoin—are not considered authorized currencies in the Kingdom, and therefore, claims made by websites promoting investment in these currencies on the internet and social media—that they are licensed by official authorities in the Kingdom—are untrue, In this regard, it warns all citizens and residents of the Kingdom not to be swayed by the solicitations of these websites, their promotional investment offers, or promises of financial gains and get-rich-quick schemes, given the high regulatory, security, and market risks involved, as well as the risk of signing fraudulent contracts and being asked to transfer funds to unknown parties.
The Committee emphasized that investing in, speculating on, and participating in virtual currencies carries various risks and negative consequences for traders, most notably the fact that this type of investment falls outside the regulatory framework in the Kingdom of Saudi Arabia, in addition to the risk of significant capital losses and exposure to scams and fraud, due to the limited information available to investors regarding investment in these currencies and the difficulty individual investors have in understanding their risks, along with investment risks linked to the high volatility of these currencies’ prices and the uncertainty surrounding how they are valued. It also entails operational risks resulting from the possibility of cyberattacks.
The Standing Committee has warned citizens and residents of the Kingdom about the risks of investing in and trading virtual digital currencies, as they are not recognized as legal tender within the Kingdom and are not traded through licensed entities in the Kingdom, in addition to suspicions that they are used as a means for illegal and statutorily prohibited financial transactions.
It should be noted that the Standing Committee, whose formation was directed by His Majesty to raise awareness and issue warnings regarding unlicensed securities trading in the foreign exchange (Forex) market, is chaired by the Capital Market Authority and includes members from the Ministry of Interior, the Ministry of Media, the Ministry of Commerce and Investment, and the Saudi Arabian Monetary Authority, and in accordance with the royal decree establishing it, the committee works to coordinate with relevant government agencies to curb and combat the marketing of investment and trading in Forex activities, as well as dealings in virtual digital currencies, In this regard, the Committee urges the public who are offered such investments or receive marketing communications about them from anyone inside or outside the Kingdom, by any means, to report such incidents via the official websites of the Saudi Arabian Monetary Authority and the Capital Market Authority so that the necessary measures can be taken with the relevant authorities in accordance with theregulations.
The Committee also confirmed that government agencies responsible for investment in the financial sector provide data and information on licensed entities on their websites, and that those wishing to invest in securities should deal with them, as they are subject to supervision by the relevant regulatory authorities in the Kingdom.
