Kuwait bans crypto and virtual asset transactions

Kuwait’s Capital Markets Authority has officially confirmed the commitment to “absolute prohibition” of virtually all crypto operations in the country.

The state of Kuwait is the latest jurisdiction to ban virtually all operations involving cryptocurrencies like Bitcoin (BTC).

On July 18, Kuwait’s main financial regulator, the Capital Markets Authority (CMA), issued a circular on the supervision and issuance of virtual assets in the country.

In the circular, the CMA confirmed the commitment to “absolute prohibition” on major use cases and operations involving cryptocurrencies, including payments, investments, and mining.

The circular also bans local regulators from issuing any licenses allowing firms to provide virtual asset services as a commercial business.

In the meantime, securities and other financial instruments regulated by the Central Bank of Kuwait and the CMA are excluded from the latest prohibitions, the announcement notes.

Apart from the prohibitions, the CMA also required customers to be cautious and aware of the risks associated with virtual assets. The regulator particularly flagged cryptocurrencies, arguing that they “don’t carry a legal status and are not issued or supported.”

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 are stipulated in Article 15 of Law No. 106 of 2013, the regulator noted.

Kuwait’s new regulations align with the country’s measures to combat money laundering and terrorist financing, the regulator stated. The CMA also referred to the conclusions of a study by the National Committee for Combating Money Laundering and Financing of Terrorism regarding the commitment to applying recommendation 15 by the Financial Action Task Force.

According to local reports, the CMA’s crypto restrictions are part of a new inter-departmental crypto ban involving several supervisory authorities in Kuwait. Similar circulars have reportedly been issued by the Central Bank of Kuwait, the Ministry of Commerce and Industry and the Insurance Regulatory Unit.