Why Kuwait Has Banned Cryptocurrency And Virtual Assets Transactions
Kuwait’s regulatory bodies, including the Central Bank of Kuwait, the Capital Markets Authority, the Ministry of Commerce and Industry, and the Insurance Regulatory Unit, have jointly issued circulars to address the use and recognition of virtual assets within the country.
These circulars, in line with the Financial Action Task Force (FATF) Recommendation No. 15 to combat money laundering and terrorism financing, impose a ban on transactions utilizing cryptocurrencies as payment instruments or methods.
One crucial aspect of these circulars is the explicit prohibition of virtual assets being used as a means of investment.
The authorities have highlighted the risks associated with dealing with virtual assets, emphasizing their lack of legal status and government backing, which contributes to the price volatility and susceptibility to sharp declines.
To protect investors and citizens from potential risks, the regulatory authorities strictly prohibit the issuance of licenses for virtual asset services as a business within Kuwait, extending these restrictions to include all cryptocurrency mining activities.
In response to the growing interest in virtual assets like Bitcoin, Ethereum, and Dogecoin, local regulatory authorities have conducted awareness campaigns to educate the public about the highly volatile nature of these assets and the absence of proper supervision or regulation within Kuwait.
In a separate matter, the Central Bank of Kuwait has specified 46 transactions and procedures that require prior approval before execution by companies, banks, and entities under its supervision.
Adherence to international codes and proper classification of economic activities is emphasized to ensure transparency and oversight within the commercial sector. The overall aim of these measures is to mitigate the risks and negative consequences associated with investing or dealing in virtual assets in Kuwait.
