Can Saudi Arabia become the next breakout point for cryptocurrencies? Riyadh Crypto Brief Analysis

City Profile

City Name: Riyadh | Country: Saudi Arabia | Urban Population: 7.82 million | Founded: 1737 | Primary Language: Arabic

Located in the heart of the Nafud Desert, Riyadh's name in Arabic means "meadow." As the third-largest city in the Middle East by population, it’s rarely associated with cryptocurrency and blockchain gaming ecosystems. But this desert city is quietly changing.

The "Gray" Status of Cryptocurrency

In Saudi Arabia, cryptocurrencies occupy a delicate position—they are neither explicitly banned nor officially recognized, and access channels are relatively limited. However, according to research from a data platform, 14% of Saudi residents aged 18 to 60 already hold cryptocurrencies, reflecting the market’s actual activity level.

Industry observers, especially those involved in blockchain insurance projects, note that despite the ambiguous official stance, the growth rate of cryptocurrency holders in Saudi Arabia is among the highest globally. What signals are hidden behind this seemingly contradictory phenomenon?

Banking Attitudes Indifferent, Government on the Sidelines

Industry insiders who have lived in Saudi Arabia for years point out that local banks generally adopt a conservative attitude toward cryptocurrencies, even creating obstacles during transfer processes. The government remains in a wait-and-see mode—they are waiting to understand the technology before making regulatory decisions, rather than rushing to implement policies.

This "let it be" attitude stems from recent lessons learned from global market volatility. No government is willing to take the aggressive approach of El Salvador, risking its citizens’ losses to push Bitcoin as legal tender.

Peer-to-Peer Trading Becomes Mainstream

Due to banking restrictions, a new trading ecosystem has emerged. Participants and counterparties transfer directly between personal bank accounts, occurring both among professional traders and informally within student groups.

An interesting detail is that, as a country that does not impose personal income tax or capital gains tax, the tax issues related to peer-to-peer transactions naturally do not exist. Additionally, cross-border transfers through international bank accounts in nearby Bahrain and other countries have become common.

Given the hurdles posed by banks and fiat systems, Riyadh has not developed a culture of directly purchasing goods or services with cryptocurrencies. Local participants focus primarily on holding and trading.

Major local players—including some wealthy family offices—also want to participate but can only do so indirectly.

Intersection of Gaming Industry and Web3

Signals of Official Support

Last year, at the Riyadh Outer E-sports Expo opening ceremony, leaders of the Saudi Esports Federation delivered passionate speeches about gaming and the metaverse. A board member of a globally renowned blockchain gaming company also appeared, offering noteworthy insights:

"Saudi Arabia’s position in the Middle East is like China’s in Asia. When China decides to enter a market, it first influences the region, then the world. Saudi also has the potential to become one of the wealthiest countries in the world."

Although the organizers deliberately avoided using the term "cryptocurrency" during the event, the implied message was clear: while Saudi Arabia’s public blockchain initiatives are not yet highly aggressive, given its wealth, population size, and regional influence, it is a sleeping giant capable of setting industry standards across the Middle East.

Establishing a Web3 Hub

This signal is not unfounded. Not long ago, a gaming company partnered with Saudi Arabia’s National Technology City—a government initiative to promote technological innovation—to establish a Web3 innovation center. The center aims to incubate Riyadh startups and support university research in blockchain gaming.

With explicit support from authorities, Saudi Arabia is opening its doors to the metaverse and Web3.

A Natural Choice for Industry Diversification

The emphasis on gaming and blockchain in Saudi Arabia stems from national development strategies. The Vision 2030 plan is the country’s long-term goal—to reduce dependence on oil and achieve economic diversification. The gaming industry, especially popular among the youth, is a key breakthrough area, as Riyadh’s hot climate makes outdoor daytime activities less feasible.

Combining blockchain with gaming is a natural step toward a crypto-enabled civilization. Officials from research institutions have stated that establishing a Web3 hub and developing the Saudi blockchain ecosystem are crucial measures to promote digital innovation.

Blockchain Initiatives in the Oil Industry

Saudi Arabia’s interest in blockchain extends beyond gaming. As early as 2020, Saudi Aramco and other energy companies jointly invested in a blockchain-based commodity trading platform (with a $5 million investment), aiming to put transactions on-chain to eliminate the paper-based processes still prevalent in traditional oil trade.

This demonstrates that Saudi’s blockchain strategy encompasses both emerging industries and modernization of its traditional pillars.

Regional Competition Landscape

Government’s Web3 Consulting Needs

Currently, startups providing blockchain consulting services in Saudi Arabia mainly advise government departments on applications in aviation and healthcare. These companies operate at a slow pace—spending time educating the government on the value of blockchain as a useful technology rather than directly promoting "cryptocurrency."

When communicating with government officials, the strategy emphasizes what Web3 can do, rather than focusing on cryptocurrencies themselves.

For fields with high public information security requirements (such as medical data that cannot be stored in the cloud and must remain domestically), consulting firms tend to recommend privacy-preserving solutions like zero-knowledge proof chains, allowing the government to enjoy blockchain benefits without losing data control.

Competition and Differences with Dubai

As a business hub, Riyadh attracts companies from across Saudi Arabia’s 32 million population and neighboring countries. In the blockchain landscape, it is closely connected to Dubai, which has become a regional magnet for the industry.

However, industry insiders point out that the UAE’s approach is subject to frequent policy changes, mainly aimed at attracting foreign investment. In contrast, the Saudi government’s stance is quite different—they do not need to attract foreign residents to boost real estate; their domestic market of 32 million people is already large enough.

Interestingly, many local observers believe that the UAE’s rapid embrace of blockchain is driven by its limited land area, requiring experimentation to find new economic growth points. Saudi Arabia, with its larger scale, can learn from the UAE’s experience and develop more stable, long-term strategies.

Emerging Local Innovation Ecosystem

As a gaming development hub, Riyadh has seen the emergence of several blockchain development companies and consulting agencies, many serving international projects. The government adopts a hands-off approach to these innovative enterprises, aiming to let the ecosystem grow freely.

In this city, some startups are actively building real blockchain solutions, serving not only local needs but also providing services to global clients.

Conclusion

Saudi Arabia’s future in cryptocurrency is neither fully open nor strictly banned but exists in a gray area full of potential. Riyadh is gradually paving the way for its digital economy through gaming and Web3 as breakthrough points.

The question is not whether Saudi Arabia can participate in the crypto wave, but rather when and how it will participate on a larger scale—an answer that may come sooner than market expectations.