CMA starts receiving security token-based fintech business models

The Capital Market Authority (CMA) announced today, Oct. 5, the start of receiving financial technology (fintech) business models for cryptocurrency securities (Security Token).

This is in line with the authority's continuous efforts to add more diversity to the fintech sector and provide an appropriate regulatory environment that stimulates innovation in the capital market.

The step comes as part of efforts to provide an opportunity for those interested to present business models related to the issuance and offering of encrypted securities using distributed ledger technology (DLT) to digitize the securities business.

The CMA aims to study the risks involved and take advantage of these opportunities to determine the optimal regulatory direction for such activities, in light of the development of mechanisms for dealing and keeping records and data between traders in the capital market in an automated technical way.

CMA's Undersecretary for Strategic and International Affairs Yazid Bin Saleh Al-Dumaiji indicated that these opportunities will enhance financial inclusion, open new investment means, provide financing channels, enhance innovation in the capital market, and support the growth of domestic product and the national economy.

The target audience for issuing these securities is those interested in fintech, entrepreneurs, and capital market institutions, he noted.

Encrypted securities will be limited to securities that represent the characteristics of traditional securities stipulated in Article 2 of the capital market law, including companies’ transferable and tradable shares as well as investment funds’ units.

Issuing and offering crypto securities are subject to market regulations.

Al-Dumaiji said that the trial is subject to the instructions of financial technology experimental permit (FinTech ExPermit), which allows the legal person or individual to apply for a FinTech ExPermit, provided that the entity is established in the Kingdom.

In 2018, the CMA launched FinTech Lab to attract various business models that contribute to building economic entities that enhance the financial sector’s depth and diversity.

The authority has granted 33 FinTech ExPermit so far.

For more information about FinTech ExPermit instructions:

FinTech ExPermit instructions

For information about the FinTech Lab and the application form:

FinTech Lab

Also, you can submit requests (or for any inquiries):

Fintech.Expermit@cma.org.sa