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Saudi Arabia is watching the cryptocurrency market closely and while local authorities have not yet put any restraints on crypto activity, some regulations might be coming soon,  Mohammed ElKuwaiz, chairman of Saudi Arabia's Capital Markets Authority, told Business Insider.

“Not unlike most other markets, the regulators in Saudi have been following developments with cryptocurrencies with great interest,” ElKuwaiz said.

“We are still evaluating what our appropriate regulatory response should be. I think we are likely to come up with something very soon,” he added.

However, the regulator comments indicate we should not expect any ban on cryptocurrencies. This is partly because the local Bitcoin craze has not reached the proportions seen in China or South Korea.

As we have found out, there are several cryptocurrency-oriented companies that provide services in Saudi Arabia. Some relevant examples are Paxful (which boasts the broadest list of payment methods) and BitOasis (focused on the Middle East and North Africa regions).

Moreover, some crypto and blockchain activity comes from the inside. It recently emerged that Saudi Arabia and the UAE are working on a pilot to explore how a digital currency could streamline cross-border payments.

In October 2017, we reported that the Saudi Arabian Islamic Development Bank required of its researchers to develop blockchain-based products. As part of the project, the Islamic Research and Training Institute has to explore how blockchain platforms could fit in with Islamic finance.

Before imposing any regulations, Saudi Arabia would like to see how the new markets behave, so it has left the door open for pilot projects from startups that operate with emerging technologies. Local regulators have initiated a sandbox program to facilitate such activities.

“Essentially, companies are issued a provisional license over a test and pilot period in order to test their ideas. After the pilot period, we can then jointly agree to fit it into the existing regulatory regime or build a regulatory regime around it,” ElKuwaiz said.