Saudi Arabia -- Securities Classification Regulatory Overview

Saudi Arabia has not enacted specific legislation classifying cryptocurrency tokens as securities as of December 2024, leaving digital assets largely unregulated with no explicit Howey test equivalent or detailed token classification framework.[4][2][5]

Legal Test for Classification: No dedicated test like the U.S. Howey test exists; instead, security tokens—defined as digital representations of ownership in traditional assets like real estate or stocks—may fall under the Capital Market Authority (CMA)'s jurisdiction if they resemble securities under existing securities laws.[2][5] Cryptocurrencies are generally not recognized as legal tender by financial institutions, and individual ownership/trading is not banned but lacks formal classification.[4][7]

Tokens Considered Securities: Security tokens (e.g., tokenized Sukuk or assets representing equity/debt) are potentially treated as securities, subjecting them to CMA oversight, while utility tokens, stablecoins, or NFTs remain in a legal gray area without specific rules.[1][2][5]

Registration/Exemption Requirements for Issuers: No current requirements apply due to absence of crypto-specific laws; planned Security Token Offering (STO) regulations were announced for late 2022 (with digital platform applications), but no updates confirm implementation.[1] Activities involving tokenized securities may require CMA approval akin to traditional offerings.[1][5]

Secondary Trading Rules: Unregulated overall; no licensed platforms for secondary trading of crypto tokens exist under CMA or Saudi Arabian Monetary Authority (SAMA), though SAMA's 2023 AML/CTF rules mandate KYC and monitoring for virtual asset platforms without authorizing trading.[2][4][6]

Enforcement Examples: No specific enforcement actions against token issuers or traders reported; SAMA has issued general warnings to financial institutions against using Bitcoin, and a banking ban on crypto applies.[7] SAMA's 2023 rules focus on compliance rather than prohibition.[6]

Key Legislation and Guidance:

• No primary crypto-securities law; relevant are CMA's general securities rules and SAMA's “Anti-Money Laundering and Counter-Terrorism Financing Rules for Financial Institutions Engaged in Virtual Assets Activities” (2023).[6]
• Planned but unconfirmed STO rules via CMA (announced 2022).[1]
• Search results provide no official URLs for Saudi-specific legislation; see cited sources for details (e.g., CMA announcements via secondary reports).[1][4][6] For official CMA/SAMA guidance, consult cma.org.sa or sama.gov.sa directly, as results lack direct links to binding texts.