Kuwait Bans All Use Of Virtual Assets And Cryptocurrencies

In Kuwait, several supervisory authorities have issued circulars pertaining to their supervision separately, including the Central Bank of Kuwait, the Capital Markets Authority, the Ministry of Commerce and Industry, and the Insurance Regulatory Unit. Virtual assets cannot be used in Kuwait as a tool/means of payment or recognized as decentralized currencies. In addition to abstaining from conducting transactions whereby Virtual Currency is used as a payment instrument/method within the scope of this prohibition.

Based on findings of a study prepared by the National Committee for Combating Money Laundering and Financing of Terrorism, the circulars were issued regarding the commitment required to implement Recommendation No 15 of the international financial action task force (FATF), which prohibits the use of virtual assets for investment, reports Al-Jarida daily.

Consequently, it is necessary to refrain from providing this type of service to any of the customers, or to issue or grant a license to anyone inside Kuwait wishing to provide virtual asset services for their own benefit or on behalf of others, since no licenses have previously been issued in this area. The circulars also ban all virtual currency/asset mining activities.

According to informed sources, virtual assets are a form of currency trading, and it is a digital currency, as it is the closest analogy to the financial situation in virtual assets.

Several sources pointed out that it was stressed that customers are constantly aware of the risks associated with dealing in virtual assets, which are carried out through transactions carried out by customers outside the State of Kuwait, especially encrypted currencies, which do not have legal status and are not supported or issued by any government.

These assets are not linked to any asset or issuer, and their prices are always driven by speculation, which exposes them to sharp declines.

The sources indicated that the local regulatory authorities have warned and carried out awareness campaigns to reduce the risks of dealing or investing in virtual assets or so-called virtual currencies, the most famous of which are “Bitcoin, Ethereum, Dogecoin and others” in light of the continued increase in calls to invest in and deal with these virtual assets which are highly risky and have various negative consequences for dealers, due to their nature and sharp fluctuation in their prices, in addition to not being subject to any supervisory or regulatory authority in the State of Kuwait.

 

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