Kuwait Ban on Cryptocurrencies

Kuwait Ban on Cryptocurrencies. In a significant move, Kuwait has officially banned all operations involving cryptocurrencies and virtual assets. The country’s primary financial regulator, the Capital Markets Authority (CMA), announced this decision recently. Confirming Kuwait’s commitment to an “absolute prohibition” on major use cases and operations involving cryptocurrencies.

The Scope of the Kuwait Ban on Cryptocurrencies

The CMA communicated this decision via a circular on the supervision and issuance of virtual assets. The circular not only bans operations such as payments, investments, and mining involving cryptocurrencies. Ban also prohibits local regulators from issuing any licenses that would allow firms to provide virtual asset services as a commercial business. However, it’s important to note that securities and other financial instruments regulated by the Central Bank of Kuwait and the CMA are exempt from these prohibitions.

CMA’s Warning to Customers

In addition to the prohibitions, the CMA has urged customers to exercise caution and be aware of the risks associated with virtual assets. The regulator specifically highlighted cryptocurrencies, arguing that they “don’t carry a legal status and are not issued or supported.” The CMA further stated that these assets are not linked to any asset or issuer, and their prices are always driven by speculation, which exposes them to sharp declines.

Penalties for Violation Kuwait Ban on Cryptocurrencies

Violating Kuwait’s Anti-Money Laundering laws, as outlined in Article 15 of Law No. 106 of 2013, can lead to penalties, the regulator noted. The new regulations align with Kuwait’s efforts to combat money laundering and terrorist financing. The CMA also cited a study by the National Committee for Combating Money Laundering and Financing of Terrorism. It supports the application of recommendation 15 by the Financial Action Task Force.

A Widespread Initiative

Local reports suggest that the CMA’s crypto restrictions are part of a wider inter-departmental crypto ban in Kuwait. Similar circulars have reportedly been issued by the Central Bank of Kuwait, the Ministry of Commerce and Industry, and the Insurance Regulatory Unit. This move by Kuwait is part of a global trend of regulatory actions as countries navigate the challenges and opportunities presented by the rise of cryptocurrencies and virtual assets.