Cryptocurrencies 'not mature enough' to assess impact: Saudi regulator

23/10/2017 13:51 AST

Abdulmalik Al-Sheikh, senior advisor at the Saudi Arabian Monetary Agency (SAMA), said cryptocurrencies are not something the body is looking to regulate right now. Al-Sheikh also said the regulator is taking a wait and see approach to initial coin offerings (ICOs).

This is a way for start-ups to raise money by issuing a virtual coin. Over $3 billion has been raised via ICOs this year, according to industry website CoinSchedule.

Cryptocurrencies are "not mature enough" yet to assess the impact they could have on regulation and the economy, a senior advisor at Saudi Arabia's financial regulator told CNBC Sunday.

Abdulmalik Al-Sheikh, senior advisor at the Saudi Arabian Monetary Agency (SAMA), said cryptocurrencies are not something the body is looking to regulate right now.

"Cryptocurrency is still at its infancy, its pilots, trials, here and there. I don't think that there is something strong where we need to jump into it currently," Al-Sheikh told CNBC at the Fintech Abu Dhabi event.

"I think all the central banks … are observing, trying, trying to measure the impact of that. I think it's about another five years before we can really see whether there is a real impact on the currencies in general (and) what will be the future operating model of … cryptocurrency."

Al-Sheikh also said the regulator is taking a wait and see approach to initial coin offerings (ICOs). This is a way for start-ups to raise money by issuing a virtual coin. But investors don't typically get equity stakes in a company like they do with an initial public offering (IPO). Over $3 billion has been raised via ICOs this year, according to industry website CoinSchedule.

"For us it's still not something that is traded and accepted globally, it's something that is done and traded in different markets. As I mentioned before we are observing that and monitoring what's happening and try to measure the risks associated."

Regulators around the world have taken different approaches to cryptocurrency and ICO regulation. For example, China recently banned all cryptocurrency exchanges and outlawed ICOs. South Korea also banned ICOs. But Japan has allowed companies to accept bitcoin as a method of payment. And Abu Dhabi also recently announced plans to try to bring ICOs under regulation.

Bitcoin, the largest cryptocurrency by market capitalization, hit a new record high on Saturday, and has seen a huge price rally year. There has been rising interest in cryptocurrencies across the board, but they have also received criticism. JPMorgan Chase CEO Jamie Dimon recently called bitcoin a "fraud", for example.

CNBC