Kuwait is the latest country to ban almost all transactions using cryptocurrencies such as Bitcoin. The Capital Markets Authority (CMA), Kuwait's top financial regulator, issued a circular on the supervision and issuance of crypto assets in the country on July 18.
The Ministry of Trade and Industry, the Central Bank of Kuwait, the CMA, and the Insurance Regulatory Unit jointly issued a circular to govern the use and recognition of virtual assets in Kuwait.
The commitment to an “absolute ban” on important crypto use cases and operations including payments, investments, and mining, was reaffirmed by the CMA in the circular letter.
Kuwaiti regulators also prohibit transactions involving the use of crypto as an instrument or payment method. This circular prohibits the use of crypto assets as a form of investment, which is an important component of their use. The authorities emphasized the dangers of working with crypto-assets and drew attention to the lack of legitimacy and support from the government.
The regulator stated that crypto “has no legal status and is not issued or endorsed”. According to the CMA, "It is not pegged to any asset, and the price of this asset is always driven by speculation which causes sharp declines."
Regulatory authorities emphasize that no business license is issued in Kuwait to provide crypto asset services, and they strictly prohibit the issuance of such licenses to individuals or companies. The circular also prohibits all domestic crypto mining operations.
Kuwait's new law, according to regulators, is in line with the country's efforts to combat money laundering and the financing of militant group activities. The chairman of Kuwait's central bank, Basel Al Haroon, recently spoke with representatives from The Banker about ongoing research into central bank digital currency (CBDC) and the potential implementation of the EKYC blockchain solution.
In response to the increased interest in crypto-assets such as Bitcoin, Ethereum, and Dogecoin, local regulatory authorities have launched a public awareness campaign. It aims to educate the public about the potential risks associated with the highly volatile nature of these assets and the lack of oversight or regulation in Kuwait.
