- Kuwait prohibits cryptocurrency usage for payments to combat money laundering.
- Capital Markets Authority bans digital asset mining and disallows crypto as a decentralized currency.
- Regulator warns against crypto-related services, except securities regulated by authorities.
On Monday, Kuwait’s financial regulator released a circular announcing the prohibition of cryptocurrency usage for payments or investment purposes. The measure aims to counter money laundering activities within the country.
In addition to its previous actions, the Capital Markets Authority has implemented a complete ban on digital asset mining and refused to acknowledge cryptocurrencies as decentralized currencies. Furthermore, the public has been cautioned against engaging with companies that offer any form of cryptocurrency-related services, as such activities are strictly prohibited.
The circular noted,
Securities regulated by the Central Bank of Kuwait and other securities and financial instruments regulated by the Capital Markets Authority are excluded from this prohibition.
Kuwait’s financial regulator
As per the regulator’s statement, the prohibitions have been introduced to ensure adherence to the global recommendations for crypto assets issued by the Financial Action Task Force (FATF). The decision to implement these measures followed a comprehensive study of the sector conducted by the National Committee for Combating Money Laundering and Financing of Terrorism.
In May that while countries are mandated to establish measures to combat money laundering and abide by the FATF’s travel rule, which necessitates crypto firms to gather and exchange data on transactions surpassing a certain threshold, the international watchdog has not explicitly demanded countries impose a ban on cryptocurrencies.
The notice issued by the regulator cautioned citizens about the inherent risks associated with volatile and unregulated cryptocurrencies that lack legal status. It further emphasized that any violations of the imposed prohibitions would lead to penalties and legal consequences.
In recent developments, Kuwait’s Ministry of Finance has stated that it does not recognize Bitcoin as a legitimate currency, and as a consequence, financial institutions in the country are prohibited from engaging in any trading activities involving cryptocurrency.
As reported by Arab Times, sources within the ministry have clarified that the Central Bank of Kuwait strictly forbids financial institutions, banks, and related companies from engaging in bitcoin trading, especially in light of the recent surge in bitcoin prices.
The sources also mentioned that the Ministry of Finance and the central bank lack the authority to regulate bitcoin trading on a broader scale due to their non-recognition of the cryptocurrency. They explained that bitcoin trading operates beyond their control, mainly conducted through the internet, making it challenging for the authorities to exercise any regulatory oversight. As a result, the trading of bitcoin remains largely outside the direct influence of governmental authorities in Kuwait.
