July 24, 2023
By Anjali Kochhar
In a significant move, Kuwait’s main financial regulator, the Capital Markets Authority (CMA), has officially declared an “absolute prohibition” on virtually all crypto operations within the country. The state of Kuwait is the latest jurisdiction to ban virtually all operations involving cryptocurrencies like Bitcoin BTC $30,208. The decision was confirmed on July 18 through a circular addressing the issuance and supervision of virtual assets.
The circular issued by the CMA outlined the comprehensive ban on major use cases and operations involving cryptocurrencies, including payments, investments, and mining. Moreover, local regulators are prohibited from granting licenses to firms seeking to offer virtual asset services as a commercial business.
It is important to note that the ban does not extend to securities and other financial instruments regulated by the Central Bank of Kuwait and the CMA. These traditional financial instruments remain unaffected by the latest prohibitions.
The CMA also took the opportunity to warn customers about the potential risks associated with virtual assets, with a particular emphasis on cryptocurrencies. The regulator highlighted that cryptocurrencies do not possess any legal status and lack support from any issuing authority or tangible asset. The prices of these assets are largely influenced by speculation, making them highly susceptible to sharp declines.
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.”
The penalties for violating Kuwait’s Anti-Money Laundering laws, as stipulated in Article 15 of Law No. 106 of 2013, will apply to any breaches of the crypto ban, the regulator noted.
The new regulations align with Kuwait’s broader efforts to combat money laundering and terrorist financing, as stated by the CMA. The regulator pointed to a study conducted by the National Committee for Combating Money Laundering and Financing of Terrorism, emphasising their commitment to applying recommendation 15 by the Financial Action Task Force.
Reports suggest that the CMA’s actions are part of a wider inter-departmental crypto ban involving several supervisory authorities in Kuwait. Circulars similar to the one issued by the CMA have been reported to come from the Central Bank of Kuwait, the Ministry of Commerce and Industry, and the Insurance Regulatory Unit.
This move by Kuwait’s regulatory bodies reflects the country’s stance on cryptocurrencies, aiming to safeguard its financial system and protect citizens from potential risks associated with the highly speculative nature of virtual assets.
About the author
Anjali Kochhar covers cryptocurrency stories in India as well as globally. Having been in the field of media and journalism for over three years now, she has developed a sharp news sense and works hard to present information that goes beyond the obvious. She is an avid reader and loves writing on a wide range of subjects.
