Kuwait’s primary financial regulator, the Capital Markets Authority (CMA), has implemented a blanket ban on cryptocurrency transactions and mining in the country. The CMA recently issued a circular outlining the supervision and issuance of virtual assets, emphasizing their commitment to prohibiting significant use cases and operations involving cryptocurrencies, cross-border payments, investments, and mining.
The ban extends to local regulators, preventing them from issuing licenses to firms intending to offer virtual asset services as a commercial business. However, the ban does not affect securities and other financial instruments regulated by the Central Bank of Kuwait and the CMA.
The CMA has also urged customers to exercise caution and highlighted the risks associated with virtual assets, particularly cryptocurrencies. The regulator pointed out that cryptocurrencies lack legal status and are not linked to any asset or issuer, making their prices highly speculative and exposing them to significant declines.
Kuwait’s strict regulations regarding virtual assets align with the country’s efforts to combat money laundering and the financing of terrorism. The CMA referred to a study by the National Committee for Combating Money Laundering and Financing of Terrorism, emphasizing its commitment to applying recommendation 15 by the Financial Action Task Force.
Local reports indicate that the CMA’s restrictions on cryptocurrencies are part of a broader inter-departmental crypto ban involving several supervisory authorities in Kuwait. The Central Bank of Kuwait, the Ministry of Commerce and Industry, and the Insurance Regulatory Unit have also released analogous directives.
These measures demonstrate Kuwait’s determination to ensure the integrity of its financial system and protect against potential illicit activities in the cryptocurrency space. The country is taking proactive steps to align its regulations with international standards and recommendations by global financial organizations.
While the ban may disappoint some cryptocurrency enthusiasts and businesses looking to operate in Kuwait, it underscores the importance of regulatory oversight and the need for responsible and secure practices within the virtual asset industry. By implementing these measures, Kuwait aims to establish a safer environment for its citizens and maintain stability in the financial sector.