Kuwaiti Authorities Crack Down on Crypto: Transactions Now Prohibited

In a recent move, the Capital Markets Authority (CMA) of Kuwait has made its stance on cryptocurrencies abundantly clear, issuing a comprehensive circular that bans most operations involving digital currencies, including the prominent cryptocurrency, Bitcoin. This circular leaves no room for ambiguity, as it enforces an “absolute prohibition” on major use cases, such as payments, investments, and mining, effectively putting the brakes on cryptocurrency-related activities in the country.

Additionally, the CMA has barred local regulators from granting licenses to commercial businesses that provide virtual asset services.

Not All Assets Are Equal

While this ban casts a wide net, it’s important to highlight that the restrictions do not extend to securities and other financial instruments that fall under the purview of regulation by the Central Bank of Kuwait and the CMA. However, despite this distinction, the circular underscores the need for cautiousness and heightened awareness when it comes to dealing with virtual assets, especially cryptocurrencies.

The CMA emphasizes that cryptocurrencies are without legal status, lacking any backing from a tangible asset or issuer. Their prices are often driven by speculative forces, making them highly susceptible to sharp declines. In this regard, the circular serves as a warning to potential investors and users, urging them to exercise caution in their dealings with digital currencies.

Making the Investor Safe

In an effort to maintain financial integrity and combat illicit financial activities, the CMA also stresses that violating Kuwait’s Anti-Money Laundering laws will result in penalties as stipulated in Law No. 106 of 2013. The newly introduced regulations align with the country’s broader measures to tackle money laundering and terrorist financing. The CMA points to a study conducted by the National Committee for Combating Money Laundering and Financing of Terrorism, which underscores their commitment to implementing Recommendation (15) set forth by the Financial Action Task Force.

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A Coordinated Effort

Reports suggest that the cryptocurrency restrictions set forth by the CMA are part of a broader inter-departmental crypto ban in Kuwait. This ban involves multiple supervisory authorities, including the Ministry of Commerce and Industry, the Central Bank of Kuwait, and the Insurance Regulatory Unit.

The move is indicative of the country’s concerted efforts to assert regulatory control over the virtual asset landscape and maintain financial stability.