Saudi Arabia Digital Asset Custody Market

Saudi Arabia Digital Asset Custody Market Overview

• The Saudi Arabia Digital Asset Custody Market is valued at USD 1.2 billion, based on a five-year historical analysis of the Middle East cloud-based digital asset custody platforms market. This growth is primarily driven by the increasing adoption of digital assets among institutional investors, the expansion of tokenized financial instruments, and the rising demand for secure storage solutions. Additional growth drivers include the integration of advanced security technologies such as multi-party computation (MPC) and cold-hot wallet infrastructure, as well as the entry of regulated custodial platforms that align with global best practices.
• Key cities such as Riyadh and Jeddah continue to dominate the market due to their status as financial hubs, attracting both local and international investors. The presence of major financial institutions and investment firms in these cities further enhances their dominance, as they seek reliable custody solutions for digital assets. Institutional depth is supported by Vision 2030’s emphasis on capital market development and digital transformation.
• In 2023, the Saudi Central Bank (SAMA) issued the “Digital Asset Custody Guidelines, 2023” mandating that all custodians must comply with strict security protocols, including multi-factor authentication, cold storage requirements, and robust risk management practices. The guidelines require custodians to obtain licensing, maintain minimum capital thresholds, and undergo periodic audits to ensure investor protection and the integrity of digital asset transactions within the kingdom.

Saudi Arabia Digital Asset Custody Market Segmentation

By Type:The market is segmented into various types of custody solutions, including Institutional Custody, Retail Custody, Multi-Signature Custody, Cold Storage Solutions, Hot Wallet Custody, Custody for NFTs & Tokenized Assets, MPC-Based Custody Solutions, and Others. Each of these sub-segments caters to different customer needs and preferences, with varying levels of security and accessibility. Institutional custody solutions are preferred by banks and asset managers for their compliance features and robust risk controls, while retail custody and hot wallet solutions offer greater accessibility for individual investors. Multi-signature and MPC-based custody solutions are increasingly adopted for enhanced security and operational flexibility, particularly for tokenized assets and NFTs.

By End-User:The end-user segmentation includes Financial Institutions (Banks, Asset Managers), Corporates & Enterprises, High-Net-Worth Individuals (HNWI), Retail Investors, and Government & Public Sector. Each segment has unique requirements for digital asset custody, influencing the types of services offered. Financial institutions prioritize regulatory compliance and advanced security, corporates seek integrated solutions for treasury and investment management, HNWIs demand personalized custody and insurance, while retail investors and the public sector focus on accessibility and transparency.

Saudi Arabia Digital Asset Custody Market Competitive Landscape

The Saudi Arabia Digital Asset Custody Market is characterized by a dynamic mix of regional and international players. Leading participants such as Saudi Digital Asset Custody Company (SDACC), Alinma Investment, SEDCO Capital, Riyad Capital, SNB Capital (formerly NCB Capital), Al Rajhi Capital, Samba Capital, Arab National Bank, Albilad Investment, Aljazira Capital, Emirates NBD, Abu Dhabi Commercial Bank, Qatar National Bank, Gulf Bank, Bank Albilad, Fireblocks, BitGo, Komainu, Zodia Custody, Standard Chartered (Zodia Markets) contribute to innovation, geographic expansion, and service delivery in this space.

Saudi Arabia Digital Asset Custody Market Industry Analysis

Growth Drivers

• Increasing Institutional Adoption:The Saudi Arabian financial sector is witnessing a surge in institutional adoption of digital assets, with over 30% of financial institutions actively exploring blockchain technology in future. This trend is supported by the Saudi Central Bank's initiatives to integrate digital currencies into the banking system, aiming for a 20% increase in digital asset transactions. Institutional players are expected to manage assets worth approximately SAR 1 billion (USD 267 million) in digital custody solutions, driving market growth significantly.
• Regulatory Clarity and Support:The Saudi government is actively working to establish a clear regulatory framework for digital assets, with the Financial Sector Development Program aiming to finalize regulations in future. This initiative is expected to enhance investor confidence, as evidenced by a 40% increase in inquiries from potential investors regarding digital asset custody services. The establishment of a regulatory body will further facilitate compliance, encouraging more firms to enter the market.
• Rising Demand for Security Solutions:With the increasing value of digital assets, the demand for robust security solutions is escalating. In future, the global cybersecurity market is projected to reach USD 300 billion, with a significant portion allocated to digital asset security. In Saudi Arabia, the number of reported cyber incidents related to digital assets has increased by 25% year-on-year, prompting institutions to invest in advanced custody solutions to mitigate risks and protect assets effectively.

Market Challenges

• Regulatory Uncertainty:Despite efforts for regulatory clarity, uncertainty remains a significant challenge in the Saudi digital asset custody market. As of now, only 50% of financial institutions are fully compliant with existing regulations, leading to hesitance in adopting digital asset custody solutions. This uncertainty can deter potential investors, as they seek stable environments for their investments, impacting overall market growth negatively.
• Cybersecurity Threats:The digital asset sector is increasingly vulnerable to cybersecurity threats, with a reported 30% rise in cyberattacks targeting financial institutions in Saudi Arabia. In future, the estimated cost of cybercrime in the region is projected to exceed SAR 2 billion (USD 533 million). This escalating threat landscape poses a significant challenge for digital asset custodians, who must invest heavily in security measures to protect client assets and maintain trust.

Saudi Arabia Digital Asset Custody Market Future Outlook

The future of the Saudi Arabia digital asset custody market appears promising, driven by technological advancements and increasing institutional interest. In future, the integration of artificial intelligence in custody services is expected to enhance operational efficiency and security. Additionally, the rise of decentralized finance (DeFi) is likely to create new avenues for custodians, as they adapt to the evolving landscape. As regulatory frameworks solidify, investor confidence will grow, further propelling market expansion.

Market Opportunities

• Expansion of Digital Asset Offerings:Custodians have the opportunity to expand their service offerings to include a wider range of digital assets, including cryptocurrencies and tokenized assets. This diversification can attract a broader client base, with an estimated 15% increase in demand for varied digital asset services anticipated in future, enhancing revenue streams for custodians.
• Partnerships with Financial Institutions:Collaborations between digital asset custodians and traditional financial institutions can create synergies that enhance service delivery. In future, partnerships are expected to increase by 20%, allowing custodians to leverage existing infrastructures and client bases, thereby accelerating market penetration and fostering innovation in custody solutions.