Saudi Arabia's banking regulator recently appointed Mohsen AlZahrani to lead its virtual assets and central bank digital currency program in a sign of the Gulf state's potential crypto ambitions.

Saudi Arabia has until now taken a more cautious approach on virtual assets, with officials raising concerns about their speculative nature. Yet the emergence of the neighboring United Arab Emirates as a global crypto hub has created some urgency in Riyadh to draft more formal rules for the asset class, people familiar with the matter said.

AlZahrani, a former managing director at consultancy Accenture, reports to Ziad Al Yousef, the Central Bank's deputy governor for development and technology, the people said, asking not to be identified because the matter is private. They're part of a team in Riyadh that's engaging with some of the world's biggest crypto firms on future regulations, they said.

Representatives for SAMA didn't respond to requests for comment.

Saudi Arabia has been pushing firms to increase their presence in Riyadh as part of Crown Prince Mohammed bin Salman's plans to turn the capital city into a global hub. That's posed a direct challenge to the Gulf's business hub, Dubai.

The kingdom is the largest economy in the Middle East, with a relatively affluent population, making it a key market for any firm operating in the region. Some of the industry's biggest players, including Binance Holdings Ltd., have staffed up their Saudi teams, identifying the kingdom as a large untapped market if the current restrictions get loosened.

In 2018, Riyadh banned banks from processing transactions involving cryptocurrencies, though workarounds exist to trade. In recent months, local financial firms reiterated the restrictions in correspondence with customers, people familiar with the matter said.

Meantime, the Saudi government has been collaborating for several years with the UAE on a potential joint digital currency.