Why Blockchain is the Next Piece in Saudi Arabia’s Capital Market Transformation

Like most sectors in Saudi Arabia, its capital market is undergoing rapid change. In line with Vision 2030 to become a global investment hub, the regulators are taking steps to build a more open, liquid and technology-driven financial ecosystem.

From the early Qualified Foreign Investor (2015) framework to the launch of the parallel market Nomu (2017), and Tadawul’s inclusion in major global indices (2019), each reform has pushed the market closer to international standards and investor accessibility. More work is in the pipeline to further welcome global investors and raise confidence in the market’s maturity.

In parallel to these regulatory changes, technology is the other key ingredient powering the transformation. A key example being SAMA’s rollout of the instant payments system SARIE (2021). I foresee blockchain technology as another key enabler that will support this shift toward a more liquid, transparent, and digital capital market that can mobilize investment at the scale Vision 2030 requires.

Let’s break it down below:

1. A Decade of Structural Modernization

Both CMA and SAMA have steadily expanded the regulatory and technical foundations of Saudi’s financial system:

• Capital Market Improvements: In addition to the gradual easing of foreign ownership limits and development of Nomu I mentioned in the introduction, there has also been a modernization of the custody and clearing functions. For example in 2022, the local Securities Depository Centre Edaa launched a new post trade link with Euroclear, providing an additional channel for international investors to access the sukuk markets listed on the Saudi Exchange and adding further linkages to international CSDs. Meanwhile, the local clearinghouse Muqassa, which plays a central risk in providing risk management, is expanding its services from OTC repo transactions to OTC interest rate derivatives. They are also reviewing accepting a broader range of securities as collateral in line with improvements in market liquidity.
• Financial infrastructure innovation: The launch SARIE, the ongoing rollout of open banking, and experimentation with blockchain-based transactions through projects like mBridge highlight how innovation can drive further improvements in the country’s liquidity, competitiveness, and investor confidence.

2. The Next Frontier: Tokenization and Market Efficiency

In line with the Kingdom’s ambition, I expect more experimentation and research into directly improving how assets are issued, traded and settled. This is where blockchain and tokenization enter the picture.

The concept is simple: representing real financial instruments — from bonds to repos — as digital tokens that can settle instantly, move 24/7, and embed compliance directly into the asset itself.

Earlier this year, our Islamic repo experiment on blockchain demonstrated this potential in practice. The transaction achieved instant asset settlement, full transparency between counterparties, and an auditable record on-chain — all while complying with Sharia requirements. It was a small-scale proof of concept, but one that pointed to a major opportunity: the ability to unlock liquidity and efficiency in core treasury operations.

3. Why This Matters Now

Saudi Arabia’s Vision 2030 is driving unprecedented demand for capital. The giga-projects, industrial expansions, and infrastructure programs underway require billions of USD in investment from both local and international sources.

To attract and deploy this capital efficiently, the market needs to offer global investors trust, speed, and interoperability. Tokenized securities and blockchain-enabled settlement networks can support exactly that — connecting the Kingdom’s capital markets seamlessly with international financial hubs that are adopting similar technologies, from JPMorgan’s Kinexys to Broadridge’s Digital Ledger Repo platform and more. In fact, new blockchain-based financial infrastructure is in development globally as seen with Hong Kong’s Ensemble project, Singapore’s Layer 1 and the newly announced SWIFT blockchain ledger -- where SAB is contributing.

For Saudi Arabia, this is about future proofing the financial system so that foreign capital can flow in efficiently and local issuers can access global liquidity pools with minimal friction.

4. The Road Ahead

Saudi Arabia is setting the standard for how an emerging market can combine regulatory clarity, digital innovation, and bold national ambition to build a truly next-generation financial ecosystem.

The key in 2026 will be to ensure the wide variety of stakeholders are involved in the experimentation of tokenized instruments and blockchain-based settlements, from the regulators to Tadawul, banks, CSDs, CCPs, to ensure that the impact and learnings are maximized.