Kuwait bans crypto and virtual assets transactions

The state of Kuwait is the latest jurisdiction to ban almost all operations involving cryptocurrencies such as Bitcoin (BTC).

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

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

The circular also prohibits local regulators from issuing any licenses allowing companies 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 bans, the announcement notes.

In addition to the bans, the CMA also required clients to be cautious and aware of the risks associated with virtual assets. The regulator particularly flagged cryptocurrencies, arguing that they “have no 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, which 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.

Related: UAE is emerging as a pro-Bitcoin mining destination in the Middle East

Kuwait’s new regulations are in line with the country’s measures to combat money laundering and terrorist financing, the regulator said. 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 apply recommendation 15 of the Financial Action Task Force.

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

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