Current Economic Situation in Saudi Arabia
The Saudi economy currently has a number of opportunities and difficulties. The country is still largely dependent on oil earnings, which are still important to its economy.
The oil sector, despite facing global uncertainties, has been stable due to Saudi Arabia's strategic participation in OPEC+ and efforts to balance oil production.
On the other hand, the non-oil sector is witnessing notable growth, driven by increased private consumption, religious tourism, and substantial domestic investments. This sector's expansion is important as the country works towards diversifying its economic base.
Key indicators paint a positive picture of the economic situation. The growth rate is expected to grow around 1.5% in 2024, with the non-oil sector expanding by 3% and 4% although slower than the 7% growth seen in 2022, is still encouraging.
Inflation remains low at approximately 2%, supported by the strong US dollar peg. Unemployment rates are decreasing thanks to new job creation initiatives.
These elements suggest that while there are challenges, particularly from global economic conditions and regional geopolitical tensions, the general economic situation in Saudi Arabia shows resilience and a promising trajectory.
Crypto Adoption in Saudi Arabia
Even though the Saudi government hasn't officially embraced cryptocurrencies, there is a growing interest in digital currencies like Bitcoin. This gap between regulations and public interest highlights the challenges governments face in controlling decentralized technologies.
Officially, buying, selling, using, and owning cryptocurrencies in Saudi Arabia are restricted. However, enforcement of these rules isn’t always strict, allowing a gray area where small-scale crypto activities continue. Many Saudis are quietly engaging with cryptocurrencies for purposes like international remittances, online shopping, and even local transactions.
The potential of the crypto market in Saudi Arabia is evident in its growth projections. In 2024, the cryptocurrency market revenue is estimated to reach US$511.7m, with a projected slight decline to US$498.2m by 2025, reflecting a -2.63% annual growth rate (CAGR). Despite this decline, the average revenue per user is estimated at US$69.5 in 2024, indicating significant value within the user base.
By 2025, Saudi Arabia is expected to have 7.40 million cryptocurrency users, with a user penetration rate of 19.66% in 2024, slightly adjusting to 19.49% by 2025. This shows that nearly one in five Saudis may engage with cryptocurrencies despite official restrictions.
Globally, the highest revenue in the cryptocurrency market is expected to come from the United States, reaching US$9.8bn in 2024, which provides a benchmark for Saudi Arabia’s growth potential.
The increasing interest in cryptocurrencies in Saudi Arabia reflects how individuals and businesses are exploring this digital asset class. As long as transactions remain small and discreet, many Saudis continue to use cryptocurrencies in everyday activities, staying under the radar of strict regulations.
Saudi Arabia’s first non-fungible token (NFT) marketplace, Nuqtah, was launched in 2021
Crypto Law in Saudi Arabia
In Saudi Arabia, the legal status of cryptocurrencies is a bit of a gray area. The Saudi Arabian Monetary Authority (SAMA) has not recognized cryptocurrencies as legal tender, and while the government hasn't explicitly banned their use, it has issued several warnings about the risks involved. Basically, trading and owning cryptocurrencies isn't illegal, but it's not officially regulated either
Regulations and Warnings
The government has cautioned that those engaging in cryptocurrency transactions may be exposed to fraud and cybercrime.
In 2018, the government restricted banks from assisting with any cryptocurrency-related transactions. This means that while you can buy, sell, and use cryptocurrencies, you do so at your own risk. There are no specific laws or penalties related to cryptocurrency trading, but the lack of regulation means there's no legal protection for investors.
Shariah Law and Cryptocurrency
Shariah law, which guides Islamic finance, also plays a role in how cryptocurrencies are viewed in Saudi Arabia. Some Islamic scholars argue that the excessive price fluctuations of cryptocurrencies make them akin to gambling, which is prohibited under Shariah law. This adds another layer of complexity to the country's legal landscape of cryptocurrencies.
Current Scenario
Despite the lack of clear regulations, interest in cryptocurrencies remains high, especially among younger, higher-income Saudis. Bitcoin is likely the most widely used cryptocurrency, along with others like Ethereum and Litecoin. The government's cautious stance and the absence of a comprehensive legal framework mean that anyone dealing with cryptocurrencies should proceed with caution.
Saudi Arabia's cryptocurrency market is expected to have a user penetration rate of 19.49% in 2025.
Benefits and Challenges of Cryptocurrency Integration in Saudi Arabia
These benefits and challenges paint a detailed picture of how cryptocurrency integration could impact Saudi Arabia, showcasing both the potential and the hurdles that come with adopting digital currencies.
Benefits
- Faster Transactions: Cryptocurrencies can speed up cross-border transactions, making it easier and quicker to send money abroad.Â
For instance, if a Saudi expatriate wants to send money back home, using Bitcoin or other cryptocurrencies could mean the money arrives in minutes rather than days. This can be especially helpful for families relying on remittances for their daily needs.
- Lower Fees: Digital currencies often come with lower transaction fees compared to traditional banking methods. Imagine a small business owner in Riyadh who needs to pay a supplier in Europe. They can avoid hefty bank fees and save money, which can be reinvested into their business by using cryptocurrencies.
- Financial Inclusion: Cryptocurrencies can provide access to financial services for people who are unbanked or underbanked, especially in remote areas.Â
For example, a farmer in a rural part of Saudi Arabia could use cryptocurrencies to receive payments for their produce without needing a traditional bank account. This can help bridge the gap for those who don't have easy access to banking services.
- Transparency: Blockchain technology ensures that transactions are transparent and immutable, reducing the risk of fraud and corruption. For instance, in a government project, using blockchain could ensure all transactions are publicly recorded and can be audited, thus reducing the chances of funds being misused.
- Innovation: The adoption of cryptocurrencies can drive technological innovation and attract investments in fintech and blockchain projects. For example, Saudi startups working on blockchain solutions could attract international investors interested in the burgeoning crypto market, fostering a new wave of technological advancements.
Challenges
- Regulatory Uncertainty: The lack of clear regulations creates uncertainty for businesses and individuals looking to invest in or use cryptocurrencies. A Saudi entrepreneur wanting to launch a crypto-based business might hesitate due to unclear legal frameworks, potentially stifling innovation and growth.
- Security Risks: Cryptocurrencies are vulnerable to hacking and cybercrime, posing risks to users' funds. For instance, if a Saudi investor's crypto wallet is hacked, they could lose a significant amount of money, highlighting the need for robust security measures.
- Market Volatility: The value of cryptocurrencies can be highly volatile, leading to potential financial losses for investors.Â
A person in Saudi Arabia who invests in Bitcoin might see the value of their investment swing wildly, which can be stressful and financially risky, especially for those not well-versed in market dynamics.
- Legal Issues: The quasi-legal status of cryptocurrencies means that users may face legal challenges and lack financial protection. For example, if a dispute arises over a crypto transaction, there may be no clear legal recourse for the aggrieved party, leading to potential legal and financial complications.
- Taxation: The decentralized and often anonymous nature of cryptocurrencies makes it difficult for tax authorities to track and monitor transactions, posing challenges for taxation. This can lead to issues with tax evasion and require the development of new tax regulations to ensure compliance and revenue generation for the government.
Saudi Arabia's cryptocurrency market is expected to have a user penetration rate of 19.49% in 2025.
The Future Prospects and Trends for Cryptocurrency in Saudi Arabia
The cryptocurrency industry is developing rapidly in many countries, including Saudi Arabia. The Saudi government has shown growing interest in financial technology (fintech) innovations, and cryptocurrency is an important part of that transformation.
Although the government has taken a cautious approach, the sector’s potential is increasingly apparent. This section provides a comprehensive overview of cryptocurrency’s future in Saudi Arabia, examining the country’s regulatory stance, recent developments, and emerging trends.
Government Regulations and Policies
The Saudi government has yet to fully establish a regulatory framework for cryptocurrencies, but efforts to increase clarity in this area are underway. The government aims to protect citizens from potential risks related to unregulated digital assets while fostering a controlled environment for innovation.
Regulatory sandboxes, for example, are enabling select fintech companies to test blockchain and cryptocurrency applications under controlled conditions. Saudi Arabia’s Central Bank (SAMA) has also partnered with the UAE Central Bank to experiment with a joint digital currency pilot project.
Also, Saudi Arabia adheres to global standards, ensuring any cryptocurrency framework aligns with anti-money laundering (AML) and counter-terrorism financing (CFT) requirements. These regulations may initially limit anonymity but could also attract institutional investors by making the market more secure.
Furthermore, the Saudi government has shown interest in developing a national digital currency through projects like the Aber Project, which could simplify cross-border transactions. Finally, Vision 2030, Saudi Arabia’s plan to diversify its economy, aligns well with cryptocurrency, as digital assets and blockchain technology could modernize sectors such as real estate, logistics, and finance.
Growing Adoption Among Individuals and Businesses
Saudi Arabia is witnessing a rise in cryptocurrency interest, especially among young people. As nearly 70% of the population is under 35, this tech-savvy generation sees cryptocurrencies as investment opportunities.
International crypto platforms such as Binance and Coinbase report increasing sign-ups from Saudi users, who are attracted to the investment potential. Furthermore, cryptocurrencies offer lower fees and quicker transactions for expatriates sending remittances home, which could become a growing trend if regulatory policies are supportive.
Although crypto ATMs are limited in Saudi Arabia, the growing interest in exchanges like Rain and BitOasis, which cater specifically to Middle Eastern users, shows increasing local adoption. A few businesses, especially in Riyadh and Jeddah, are examining cryptocurrency payment options as well.
Also, Saudi universities and tech institutions are beginning to educate students about blockchain and cryptocurrency, laying a foundation for informed use and potential innovation.
Development of Blockchain Infrastructure
Saudi Arabia has shown interest in using blockchain for government services. Blockchain technology could improve transparency and efficiency in sectors such as land registry and supply chain management, where the government aims to reduce fraud and increase operational efficiency.
Blockchain-based digital identity systems could enhance data privacy and streamline digital transactions, aiding sectors such as banking and healthcare. The rise of decentralized finance (DeFi) could also improve financial inclusion in Saudi Arabia by providing services to those without access to traditional banks, aligning with Vision 2030’s goals for financial inclusion.
Saudi entities are forming partnerships with international blockchain projects, especially in areas such as trade and finance, to bring innovation to the local market. The government’s focus on entrepreneurship through initiatives like the Badir Program for Technology Incubators is also promoting blockchain startups, which could lead to innovative blockchain applications within Saudi Arabia.
Technological Advancements and Innovations
Smart contracts are emerging as a potential solution for automating transactions in real estate, finance, and business, with Saudi real estate in particular standing to benefit from greater transparency and efficiency.
Also, non-fungible tokens (NFTs) are gaining attention worldwide, and as Saudi Arabia promotes arts and culture, NFTs offer Saudi artists new avenues for reaching audiences and monetizing their work. Security is a major focus, with Saudi banks and fintech companies investing heavily in enhanced security measures for digital assets.
As cryptocurrencies gain acceptance, two-factor authentication, biometrics, and encryption are being adopted to secure transactions. Saudi Arabia is also exploring energy-efficient cryptocurrency mining solutions, particularly as the country uses its solar energy potential, aligning with its broader goals for environmental sustainability.
Blockchain and the Internet of Things (IoT) could work together in Saudi Arabia to improve sectors like logistics, oil, and healthcare, enhancing data security and operational efficiency.
International Trade and Cross-Border Payments
Cryptocurrency could simplify cross-border transactions, which are vital for Saudi businesses reliant on international trade. By reducing the number of intermediaries, cryptocurrencies make transactions quicker and less costly compared to traditional bank transfers.
Saudi Arabia’s interest in cross-border crypto transactions is further supported by partnerships with neighboring countries and international blockchain projects, particularly in trade finance. For example, the Aber Project collaboration between Saudi Arabia and the UAE has tested the use of a shared digital currency for cross-border payments.
Also, cryptocurrency could support the Kingdom’s goals of diversifying its economy beyond oil by facilitating trade in sectors such as tourism, e-commerce, and other goods and services. This growing interest in cross-border payments aligns with Vision 2030’s broader objectives of expanding Saudi Arabia’s global economic footprint
Conclusion
Although cryptocurrencies are not yet recognized as legal tender, Saudi Arabia has shown a clear interest in their underlying technology. Blockchain projects like the Aber Project, a collaborative digital currency pilot with the UAE, demonstrate the government's willingness to explore new financial technologies. Such initiatives reflect a growing openness to innovation while maintaining a cautious approach that prioritizes financial stability and risk management
