Recently, Kuwait’s Capital Markets Authority (CMA) released a circular focused on authorizing virtual assets in the country. This effort was a joint one, with the Central Bank of Kuwait, the Ministry of Commerce and Industry, and the Insurance Regulatory Unit also issuing circulars.
The CMA prohibited any activities involving cryptocurrencies, such as payments, investments, and mining. This includes using virtual assets as investment vehicles. Furthermore, local regulators are not allowed to offer licenses for crypto services as commercial entities.
The Central Bank of Kuwait has already outlined 46 transactions and procedures concerning companies, banks, and supervised entities, which cannot be finalized without the approval of the Central Bank. The new crypto restrictions are part of an inter-departmental ban that involves multiple supervisory authorities in Kuwait.
The authorities have warned about the risks of dealing with virtual assets due to their unregulated status and lack of government backing. Prices of these assets are often driven by speculation, making them vulnerable to sharp declines. They have also mandated customers to exercise caution and be aware of the risks associated with virtual assets. Violations of the prohibitions would lead to penalties, specified in Article 15 of Law No. 106 of 2013.
The circulars were issued in alignment with the findings of a study prepared by the National Committee for Combating Money Laundering and Financing of Terrorism. The CMA also cited the conclusions of the Financial Action Task Force (FATF)’s Recommendation 15, which countries are obligated to implement to prevent money laundering. The FATF has not, however, mandated countries to ban cryptocurrencies.
In conclusion, Kuwait’s authorities have issued a series of prohibitions and warnings regarding virtual assets. These restrictions are intended to reduce the risks of dealing with cryptocurrencies, as well as to comply with the FATF’s Recommendation 15. It is important for citizens to exercise caution and remain aware of the risks associated with virtual assets.
