The Riyadh Chamber of Commerce and Industry shed light on the risks of dealing in cryptocurrencies through a lecture organized by the Chamber’s Legal Department. The lecture aimed to explain the types of cryptocurrencies, their origins, their nature, and the stance of regulators and legislators toward them.
During the lecture, Dr. Mishaal bin Saleh Al-Samhan, a professor of commercial law at Majmaah University and a researcher in financial technology, presented an overview of the history and origins of cryptocurrencies.
Digital Currencies and Bitcoin
He said: Cryptocurrencies include a number of types, and that Bitcoin is a distinct category in its own right. The chosen definition of Bitcoin is: a secure, intangible, decentralized, valuable, and fungible digital asset. He then noted that other cryptocurrencies differ from Bitcoin; some are: backed by a project, affiliated with a company or project, designed to provide a payment service for a specific company, a project under development, backed by gold, or intended for usury (interest-bearing loans), and some are scam coins, stablecoins, or intended to support and serve Bitcoin, among other types he mentioned in the lecture.
The Difference Between Digital, Virtual, and Cryptocurrencies
He added that there are several differences between digital, virtual, and cryptocurrencies, explaining that a digital currency is "a currency under the electronic responsibility of a central bank that can be used to settle payments or as a store of value," while a virtual currency is «a virtual currency in a specific virtual world, existing within a computerized electronic system, often found in games, and having value within its specific world.»
White Paper Fraud
Al-Samhan also discussed some methods of fraud and how to evaluate each cryptocurrency project, then spoke about the "whitepaper" , which is a document often written by the owner, designer, and producer of the cryptocurrency to explain the philosophy, project, and operation of the digital cryptocurrency. He noted that the accuracy of the information in this whitepaper cannot be guaranteed, as it is not an impartial source, and therefore one should exercise caution when engaging in this type of transaction.
Blockchain Technology
In addition, the lecturer discussed platforms that deal with cryptocurrencies and blockchain technology, the difference between trading via platforms versus through blockchain technology, and how to list a currency on platforms. He discussed blockchain technology in terms of its definition, origins, characteristics, and types, and spoke about financial technology in general and the impact of these technologies on cryptocurrencies.
Warning About Suspicious Cryptocurrencies
Regarding the Islamic legal ruling, Al-Samhan discussed that this depends on two factors: the origin of the currency and the type of contract used to transact with it. He then noted that the relevant regulatory and legislative authorities in the Kingdom of Saudi Arabia have warned against dealing in these currencies due to the harm, deception, uncertainty, and gambling they entail, deception, and fraud, as well as certain internationally prohibited activities such as money laundering and supporting terrorism. He then cited some judicial precedents in the United States regarding cryptocurrencies and the stance of certain countries on them.
