A government committee comprising of government ministries and the Saudi Arabian Monetary Authority – the central bank – issued the warning yesterday.
In a statement, the committee said the reason was that bitcoin poses “negative consequences and high risks on traders” as it is outside of government control.
Saudi Arabia’s citizens and residents have been urged to not drift “after such illusion and get-rich” schemes due to the security and market risks involved, including the signing of fictitious contracts and transfer of funds to unknown recipients.
They were also warned that cryptocurrencies are regarded as an illegal activity.
The watchdog was formed by the supreme decree and is headed by Capital Market Authority, Ministry of Ministry of Interior membership, Ministry of Media, Ministry of Commerce and Investment and Saudi Arabian Monetary Authority.
The watchdog will work with relevant parties to reduce marketing for investment and trading in forex and virtual currencies.
Saudi Prince Al-Waleed bin Talal criticised bitcoin during an appearance on CNBC in October last year, slamming it as a “fraud”.
“I just don’t believe in this bitcoin thing,” Al-Waleed said before comparing it to Enron, the American energy company that flopped in 2000.
Speaking at the time he added: “This thing is not regulated. It’s not under control. It’s not under the supervision of any federal – elect – United States Federal Reserve or any other central bank.”
The announcement follows the launch of BitOasis, the first bitcoin company in the Middle Eastern and North Africa region.
Citizens in Saudi Arabia, the UAE, Kuwait, Bahrain and Qatar can use the exchange service by sending money to a BitOasis bank account and exchanging it for bitcoins for a one per cent fee.