The Capital Markets Authority of Kuwait has implemented a complete umbrella ban on virtual assets and cryptocurrency transactions. Furthermore, domestic regulators are also restricted from issuing operational licenses to crypt-related platforms, according to the new circular.
These new rules were implemented to tally with the worldwide cryptocurrency recommendation sent by the Financial Action Task Force.
Also, the CMA warned investors in Kuwait about the risks related to the highly volatile and unregulated virtual asset industry before implementing the recent ban.
Crypto Transaction Restrictions by Kuwait
Kuwait’s primary financial regulator, the Capital Markets Authority (CMA), issued a recent circular concerning the country’s regulation and issuance of cryptocurrencies and digital currencies.
On July 18, the country emerged as the latest jurisdiction to terminate all crypto-related transactions for users and legal entities. According to the circular, the authority banned all use of cryptocurrencies and other digital assets for transactions and investments.
The regulatory watchdog emphasizes the risks of investing and engaging in digital assets, pointing to the high volatility, lack of legitimacy, and backing from the government. The authority further claimed that digital assets are not considered legal and are also not supported or issued.
According to the CMA, the crypto industry is not linked to any issuer or viable asset, and various speculations always influence prices. This exposes them to a sharp decrease and other related risks.
The regulatory bodies made clear that no business licenses have ever been granted in Kuwait for the supply of virtual asset services, and they vehemently prohibit providing such permits to individuals or companies. The circulars expand their bans to include all domestic cryptocurrency mining operations.
Kuwait and Cryptocurrencies
The regulator claims that Kuwait’s new regulations align with the nation’s efforts to fight money laundering and terrorism financing.
In a recent interview with a representative of The Banker, Basel Al Haroon, governor of Kuwait’s central bank, discussed continuing research into central bank digital currencies (CBDCs) and the future use of blockchain EKYC solutions.
Its purpose is to inform the public of the hazards that could result from the extremely volatile nature of these assets and the absence of oversight or regulation in Kuwait.
In addition to warning citizens of digital assets’ volatility and unregulated status, the watchdog stated that violations of the recent measures on the industry would attract penalties.
These punishments for breaking the Kuwait Anti-Money Laundering rules are stated in Article 15 of Law Number 106 of 2013. The circulars were published in alignment with the research by the National Committee for Combating Money Laundering and Financial Terrorism.