Saudi Arabia -- Stablecoin Regulations Regulatory Overview

Saudi Arabia does not yet have a finalized regulatory framework for stablecoins, though the government has announced plans to launch them soon under joint oversight by the Saudi Central Bank (SAMA) and the Capital Market Authority (CMA).[1][3]

Current Regulatory Status

As of December 2024, Saudi Arabia has not enacted specific legislation governing stablecoins or cryptocurrencies, though they are not explicitly prohibited.[4] The Kingdom has adopted a cautious approach, prioritizing financial stability and consumer protection while avoiding legal ambiguity.[5] However, in 2021, the SCA issued Administrative Decision No. (11) of 2021 to provide guidance for crypto asset regulations.[4]

Classification and Oversight Division

A key challenge for regulators is determining the regulatory classification of stablecoins—whether they function as payment instruments, securities, commodities, or a unique asset class.[1] This classification will determine which authority oversees them: SAMA, the CMA, or both. The authorities have not yet publicly clarified this distinction, and it may require unprecedented inter-agency coordination and potentially new legislative frameworks to establish seamless regulatory boundaries for hybrid instruments blending payment and investment features.[1]

Reserve and Licensing Requirements

The search results do not provide specific reserve requirements or detailed licensing procedures for Saudi stablecoins, as the framework remains under development. However, regulatory guidance indicates that stablecoins must comply with Shariah principles to gain mass acceptance in the Kingdom.[1] This has led to a regulatory preference for asset-backed or gold-backed stablecoin models over algorithmic ones, which may not satisfy Islamic finance requirements.[1]

Algorithmic Stablecoin Restrictions

The framework explicitly disfavors algorithmic stablecoins in favor of asset-backed models due to Shariah-compliance requirements and stability concerns.[1]

Redemption Rights

No specific redemption timelines or procedures have been publicly established in the available regulatory guidance.

CBDC Interaction

Saudi Arabia is gradually shifting its stance toward Central Bank Digital Currencies (CBDCs), with SAMA authorized to issue and manage a digital Riyal.[5] This approach allows the central bank to maintain control over monetary policy while avoiding instability and legal ambiguity.[5] The relationship between future stablecoin regulations and the digital Riyal has not been clarified in available sources.

Operational and Supervisory Challenges

Regulators have identified the need to build new supervisory capacities to monitor 24/7 blockchain-based systems, conduct real-time audits of reserve holdings, and oversee smart contract security to protect consumers from technical failures or hacks.[1]

The search results do not provide specific legislation URLs or enacted laws, as the framework remains in development stages.