Kuwait Implements Ban on Cryptocurrency and Virtual Assets Transactions

Kuwait has joined the growing list of countries imposing strict regulations on cryptocurrency activities, as its main financial regulator, the Capital Markets Authority (CMA), issued a circular on July 18 to ban virtually all operations involving cryptocurrencies like Bitcoin.

The circular leaves no room for ambiguity, reaffirming an “absolute prohibition” on major use cases and operations related to cryptocurrencies. This includes bans on cryptocurrency payments, investments, and mining activities. Furthermore, the CMA prohibits local regulators from issuing licenses that would allow firms to offer virtual asset services as commercial businesses.

However, it’s worth noting that securities and other financial instruments regulated by the Central Bank of Kuwait and the CMA are exempt from these latest restrictions.

The CMA emphasized the importance of raising awareness about the risks associated with dealing with virtual assets and cryptocurrencies in particular. It highlighted that cryptocurrencies lack legal status, are not issued or supported by any entity or asset, and their prices are driven by speculation, making them susceptible to sharp declines.

The circular also pointed out that violating Kuwait’s Anti-Money Laundering laws could result in penalties as stipulated in Article (15) of Law No. 106 of 2013.

Kuwait’s latest regulations align with its efforts to combat money laundering and terrorist financing, as recommended by the Financial Action Task Force. The CMA cited a study by the National Committee for Combating Money Laundering and Financing of Terrorism as the basis for implementing the Recommendation (15).

Reports suggest that the CMA’s move is part of a broader inter-departmental crypto ban in Kuwait, involving several supervisory authorities. Circulars with similar restrictions have reportedly been issued by the Central Bank of Kuwait, the Ministry of Commerce and Industry, and the Insurance Regulatory Unit.

With this comprehensive ban in effect, Kuwait reinforces its stance on cryptocurrency activities, aiming to ensure financial stability, mitigate risks, and safeguard against illicit activities associated with virtual assets within its borders.

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