The Kingdom of Saudi Arabia is reportedly planning to launch its own digital currency next year, according to Mohsen Al Zahrani, the Innovation Center (SPARC) director at Saudi Arabia’s Monetary Authority (SAMA), the country’s financial regulator.
On Monday (November 19th), Mubarak Rashed Al-Mansouri, the governor of UAE’s central bank, said that the state-backed cryptocurrency had already entered its design phase.
Cryptocurrency Will Be Used For Bank-To-Bank Cross-Border Payments
The Saudi Press Agency revealed on Tuesday that Saudi Arabia will be developing its national cryptocurrency through a collaborative effort with the United Arab Emirates (UAE). At present, Saudi Arabia has put together a research team that is looking into what may be required to launch a national digital currency.
Saudi Arabia’s authorities intend to use the state-backed cryptocurrency to conduct faster and more cost-effective cross-border payments. Moreover, the digital currency will mainly be used for bank-to-bank transactions.
Al-Mansouri explained that Saudi Arabia had decided to launch its own digital currency because the country wants to adopt the latest financial technology. However, the governor said there are many challenges that lie ahead – including ensuring consumer protection.
Making Sure New Cryptocurrency Complies With Financial Regulations
He recommended that both Saudi Arabia and UAE’s financial market regulators look into the regulatory requirements of introducing a new currency – which would serve as a legal and official medium-of-exchange (MoE).
As CryptoGlobe reported in August, the Saudi Arabian Standing Committee, which oversees securities activities in the kingdom’s foreign exchange market, reaffirmed that trading or dealing (in any other way) in bitcoin (BTC) and other cryptocurrencies is considered illegal.
Saudi Arabia’s regulators had clarified their stance against the use of digital currencies after several websites and social media accounts claimed that they had been “authorized” to provide crypto-related services in the kingdom.
Saudi Arabia Has Banned Decentralized Digital Currencies
In response to these false claims, the Saudi Arabian Standing Committee stated that “no parties or individuals are licensed for such practices.” Given the Middle Eastern nation’s stance on decentralized cryptocurrencies, Saudi Arabia may only be launching a digital currency to help improve the efficiency of the state-controlled financial system.
ADAB Solutions, a UAE-based financial services firm, has also launched the world’s First Islamic Cryptocurrency Exchange (FICE). The exchange is reportedly Shariah-compliant – which means that its services will be in accordance with Islamic law.