Kuwait prohibits crypto and virtual asset dealings

By: Henry Felix

July 20, 2023 1:39 PM

Kuwait's Capital Markets Authority has publicly confirmed the country's commitment to "absolute prohibition" of nearly all cryptocurrency activity.

Kuwait is the latest nation to prohibit practically all transactions involving cryptocurrencies such as Bitcoin (BTC).

The Capital Markets Authority (CMA), Kuwait's principal financial regulator, released→ a circular regulating the supervision and issuing of virtual assets in the country on July 18.

The CMA reiterated its "absolute prohibition" stance in the circular, which applies to significant cryptocurrency use cases like payments, investments, and mining.

The circular also prohibits local regulators from giving licenses allowing enterprises to perform virtual asset services for profit.

Meanwhile, securities and other financial services regulated by both the Central Bank of Kuwait and the Capital Markets Authority (CMA) are exempt from the new regulations, according to the announcement.

In addition to the restrictions, the CMA recommended that users exercise extreme caution and understand the dangers of virtual assets. The regulator singled out cryptocurrencies, claiming that they "do not have a legal status and are not issued or supported."

The CMA went on to say:

"It is unrelated with any other asset or issuer, and the values of such assets are constantly driven by speculation, leaving them vulnerable to a sharp decline."

The consequences for breaking Kuwait's anti-money laundering regulations are outlined in Article 15 of Law No. 106 of 2013, according to the regulator.

Kuwait's new restrictions, according to the regulator, are in line with the country's efforts to prevent money laundering and terrorist financing. The CMA also pointed out the findings of a study conducted by the National Committee to Combat Money Laundering and Terrorist Financing on the commitment to implementing the Financial Action Task Force's guidelines.

Local news outlets have reported→ that the CMA's crypto limitations are part of a wider crypto prohibition enacted by a number of Kuwait's regulatory bodies. The Central Bank of Kuwait, the Ministry of Commerce and Industry, and the Insurance Regulatory Unit have apparently all issued circulars with almost similar wording.