- The Capital Markets Authority (CMA) of Kuwait has announced a comprehensive prohibition on all activities related to cryptocurrencies and virtual assets.
- The ban encompasses a wide range of activities, including transactions, investments, and even mining of cryptocurrencies.
Kuwait has become the latest nation to enforce a comprehensive ban on activities involving cryptocurrencies like Bitcoin. On July 18, the Capital Markets Authority (CMA), the nation’s paramount financial regulatory body, issued a circular addressing the supervision and issuance of virtual assets within the country.
A United Front Against Crypto
The Ministry of Commerce and Industry, the Central Bank of Kuwait, the CMA, and the Insurance Regulatory Unit have collectively issued circulars outlining the rules regarding the usage and acceptance of virtual assets in Kuwait.
In the said circular, the CMA unequivocally reaffirmed its commitment to a “total prohibition” on significant cryptocurrency-related activities. This includes not only transactions and investments, but also the mining of cryptocurrencies.
The Ban’s Scope and Rationale
Kuwait’s regulatory authorities have prohibited all transactions wherein cryptocurrencies serve as payment instruments or methods. Investments using virtual assets are also banned, a directive that affects a crucial aspect of the cryptocurrency sphere. The authorities have underscored the risks inherent in dealing with virtual assets and have emphasized their absence of governmental endorsement or legitimacy.
The CMA took particular aim at cryptocurrencies, remarking that they
“do not bear a legal status and are neither issued nor supported.”
The CMA also highlighted the speculative nature of these assets, their lack of ties to any physical asset or issuer, and their consequent vulnerability to sharp price declines.
In the circular, the authorities made it clear that no business licenses for providing virtual asset services have been issued in Kuwait. They further prohibited the issuance of such licenses to individuals or businesses, extending the ban to encompass all local cryptocurrency mining operations.
Harmonizing with Anti-Money Laundering Efforts
According to the regulator, the new laws align with Kuwait’s initiatives to combat money laundering and terrorism financing. Basel Al Haroon, the governor of Kuwait’s central bank, recently engaged in a discussion about the ongoing examination into central bank digital currencies (CBDCs) and potential deployment of blockchain EKYC solutions.
In response to rising interest in cryptocurrencies such as Bitcoin, Ethereum, and Dogecoin, local authorities have initiated public awareness campaigns to inform the populace about the associated risks. These risks include the high volatility of these assets and the absence of regulatory supervision within Kuwait.
