Middle Eastern Crypto Banking Bans: Full 2025 Regulatory Overview

• By JayKay Sun
• 12 Dec, 2024
• 14 Comments

With more than $4trillion in digital assets circulating worldwide, the Gulf region has become a testing ground for how governments balance financial stability, economic diversification, and sovereignty. The result is a crypto banking bans patchwork that lets some banks dip their toes in blockchain while shutting others out completely. If you’re a fintech founder, an investor eyeing the Middle East, or simply curious about why you can’t use a Saudi bank to buy Bitcoin, this guide walks you through every major policy, the players behind them, and what the next few years might hold.

Regulatory Landscape Across the GCC

Across the Gulf Cooperation Council (GCC), regulators have taken three broad stances:

• Permissive licensing - allowing banks to offer limited crypto services under strict oversight (e.g., Bahrain).
• Controlled restriction - banks may engage only with approved tokens or after explicit approval (e.g., Saudi Arabia, UAE).
• Total prohibition - all crypto‑related activities are barred for financial institutions (e.g., Qatar, Kuwait).

These approaches reflect a “patchwork quilt” of policies, as noted by Carnegie Endowment researcher Ala'aKolkaila, and are driven by two common goals: protect the financial system from volatility and use blockchain tech for sovereign digital currencies.

Saudi Arabia: Restricted Yet Progressive

Saudi Arabia is a key GCC market where the Saudi Arabian Monetary Authority (SAMA) classifies cryptocurrencies as non‑legal tender assets and imposes a "restricted + managed" regime on banks. Since a 2019 Ministry of Finance warning, banks must obtain explicit SAMA approval before touching any crypto transaction. The rule applies to retail trading, custody, and even advisory services.

Despite the ban, Saudi Arabia participates in the mBridge CBDC pilot alongside the UAE, China, Thailand, and Hong Kong. SAMA’s sandbox program lets fintech firms test blockchain use cases, suggesting a future where regulated crypto services could coexist with strict banking prohibitions.

United Arab Emirates: Licensed Token Framework

United Arab Emirates operates a token‑licensing system overseen by the Central Bank of the UAE, permitting only approved payment tokens such as the UAE Dirham Payment Token. Unlicensed crypto activity is illegal for banks, and the Central Bank enforces clear boundaries between permitted token usage and prohibited private crypto services.

UAE banks have been testing cross‑border CBDC interoperability through ProjectAber since 2019, positioning the country as a regional leader in regulated digital finance while keeping a tight leash on private crypto.

Qatar: From Total Ban to Tokenized Assets

Qatar maintains a comprehensive ban on cryptocurrency services for all financial institutions, enforced by the Qatar Financial Centre Regulatory Authority (QFCRA). The 2020 ban covered everything from Bitcoin trading to stablecoins. However, the Digital Asset Regulations2024 introduced a legal path for tokenized shares and bonds, while explicitly labeling cryptocurrencies as “Excluded Tokens.”

The QFCRA is drafting a broader digital‑asset framework expected to finalize in Q22025, which could become a model for regional standardization.

Kuwait: Aggressive Enforcement and Mining Crackdown

Kuwait has taken the most forceful stance by banning crypto mining and imposing severe penalties on any financial‑institution involvement in digital assets. Enforcement actions cut local electricity consumption by 55%, a clear signal that the Central Bank of Kuwait views mining as a threat to national resources and financial stability.

Like Qatar, Kuwait treats all private crypto activities as prohibited, leaving no room for licensed experimentation.

Bahrain: Licensed Crypto‑Asset Module

Bahrain offers a middle‑ground approach through the Central Bank of Bahrain’s Crypto‑Asset (CRA) module, which outlines permitted activities for banks under a licensing regime. Banks can engage in approved crypto‑asset services-such as custody or tokenized securities-provided they obtain a CRA licence and meet AML/KYC standards.

Bahrain’s active participation in CBDC pilots with JPMorgan and its interoperability tests suggest a strategy that embraces regulated crypto while keeping private, unlicensed tokens out of the banking system.

Oman: Emerging Frameworks and CBDC Participation

Oman is currently drafting specific crypto regulations that align with broader GCC trends, while already taking part in regional CBDC pilots. Though detailed rules are still in flux, the Central Bank of Oman signals that unauthorized banking activities will be restricted, with a future licensing pathway likely to follow Bahrain’s model.

Oman’s involvement in mBridge and other cross‑border projects shows that the country values blockchain infrastructure even as it tightens crypto‑banking rules.

Gulf Cooperation Council (GCC): A Coordinated Yet Divergent Effort

Gulf Cooperation Council serves as the political and economic umbrella for Saudi Arabia, UAE, Qatar, Kuwait, Bahrain, and Oman, fostering collaboration on CBDC pilots while allowing each member to set its own crypto‑banking policies. This coordination explains why all six nations are part of the mBridge initiative despite having wildly different domestic rules on private cryptocurrencies.

Comparison of GCC Crypto‑Banking Policies

Implications for Crypto Users and Institutions

These bans create real friction:

• Liquidity constraints - Without bank‑backed custodians, traders rely on offshore exchanges, which can be less secure and more expensive.
• Limited institutional participation - Asset managers can’t offer crypto‑linked products inside the GCC, stunting fund growth.
• Workarounds and risk - Many users turn to peer‑to‑peer platforms or crypto‑friendly jurisdictions, exposing themselves to regulatory uncertainty.
• Opportunity for regulated sandboxes - Fintechs that secure SAMA or UAE approval can gain a first‑mover advantage in a market hungry for digital finance.

Future Outlook: Toward Gradual Liberalization?

Several forces suggest that the current strict regime won’t last forever:

1. CBDC proof‑of‑concepts - As mBridge and national pilots demonstrate secure, fast settlements, regulators gain confidence in digital assets, opening the door for limited private‑crypto services.
2. Economic diversification goals - GCC Vision2030 plans emphasize fintech as a growth engine, pushing governments to create regulated pathways for crypto‑related businesses.
3. International pressure - Global AML/CTF standards encourage transparent licensing rather than blanket bans.
4. Regional standardization - Qatar’s upcoming 2025 framework could become a template, prompting neighboring states to align for easier cross‑border compliance.

In practice, we may see a three‑phase evolution:

• Phase1 (2025‑2026): Expand sandbox programs, issue pilot licences for tokenized securities and stablecoins used in trade finance.
• Phase2 (2027‑2029): Introduce a limited‑scope “crypto‑banking licence” that allows custodial services under strict AML/KYC, likely first in Bahrain and the UAE.
• Phase3 (2030+): Harmonized GCC framework where private crypto can be offered by banks under a unified licensing rubric, similar to the EU’s MiCA regulation.

Until then, anyone looking to operate in the region should treat the current bans as firm-plan around them, use approved tokens, and keep an eye on sandbox announcements.

Frequently Asked Questions

Can I buy Bitcoin through a Saudi bank?

No. Saudi banks may only handle crypto after obtaining explicit approval from SAMA, and such approval has never been granted for retail Bitcoin purchases.

Which GCC country currently allows licensed crypto‑asset services?

Bahrain, through its Crypto‑Asset (CRA) module, permits banks to offer approved crypto‑related services under a licence.

What is the mBridge project?

mBridge is a wholesale Central Bank Digital Currency (CBDC) pilot that links the Saudi, UAE, Bahrain, and Oman central banks to enable real‑time cross‑border settlements.

Will Qatar eventually allow private crypto banking?

Qatar’s 2025 digital‑asset framework is expected to keep cryptocurrencies excluded, but it will legalize tokenized securities. A full banking‑crypto licence could appear after that, similar to Bahrain’s model.

How do the CBDC pilots affect the crypto bans?

CBDC pilots demonstrate that regulators trust blockchain technology for sovereign currencies. This success often softens attitudes toward regulated private crypto, paving the way for future licensing.