Kuwait Bring Complete Ban On Crypto and Virtual Asset Transactions In the Country

While some countries in the world have been working on embracing the use of cryptocurrencies, Kuwait has taken an absolute opposite stand. Kuwait becomes the latest jurisdiction to ban all operations involving cryptocurrencies such as Bitcoin (BTC).

Earlier this week on Tuesday, July 18, Capital Markets Authority (CMA) - Kuwait’s main financial regulator - issued a circular over the supervision as well as the issuance of digital assets in the country.

In the circular, the CMA has confirmed its commitment over “absolute prohibition” on major use cases and operations such as payments, investments, and mining, involving cryptocurrencies. Besides, the circular also puts a ban on local regulators for issuing licenses and allowing firms to provide virtual asset services in the form of commercial business.

Meanwhile, it's important to note that securities and other financial instruments regulated by the Central Bank of Kuwait and the CMA are exempt from the recent prohibitions, as mentioned in the announcement. "Securities regulated by the Central Bank of Kuwait and other securities and financial instruments regulated by the Capital Markets Authority are excluded from this prohibition," the circular said.

In addition to the prohibitions, the CMA emphasized the importance of customers being cautious and informed about the risks linked to virtual assets. The regulator specifically highlighted cryptocurrencies, stating that they lack legal status and are not backed or issued by any authority.

The CMA added: “It is not linked to any asset or issuer, and that the prices of these assets are always driven by speculation that exposes them to a sharp decline.”

Kuwait's latest regulations are in line with their efforts to combat money laundering and terrorist financing, as stated by the regulator. The CMA also cited a study conducted by the National Committee for Combating Money Laundering and Financing of Terrorism, which emphasizes their commitment to implementing recommendation 15 by the Financial Action Task Force.

Local reports suggests that the CMA's restrictions on cryptocurrencies are part of a broader crypto ban involving various supervisory authorities in Kuwait. Similar circulars have been issued by the Central Bank of Kuwait, the Ministry of Commerce and Industry, and the Insurance Regulatory Unit.

The regulator noted that the penalties for violating Kuwait’s Anti-Money Laundering laws are stipulated in Article 15 of Law No. 106 of 2013.