The Kuwaiti financial regulator, the Capital Markets Authority (CMA), has recently issued a broad ban on all forms of cryptocurrency operations within the country. According to a circular published on July 18th, this ban covers a wide range of activities, including cryptocurrency transactions, investments, and mining.
Furthermore, the regulatory directive categorically bars the recognition of digital currencies as decentralized forms of legal tender. In addition to this, local authorities have been explicitly restricted from issuing licenses to businesses for providing services related to virtual assets.
However, the ban does not extend to securities regulated by the Central Bank of Kuwait or other financial instruments under the jurisdiction of the CMA.
Why to ban
The regulator's stringent stance on cryptocurrencies aligns with the Financial Action Task Force's (FATF) global recommendations concerning digital assets. This move follows a detailed study conducted by the National Committee for Combating Money Laundering and Financing of Terrorism.
Although the FATF has encouraged the implementation of safeguards to prevent money laundering and has mandated crypto firms to adhere to the travel rule, which involves collecting and sharing data on transactions above a certain threshold, the international watchdog has not advised countries to outright ban crypto.
Nonetheless, the CMA warns the public of the inherent risks associated with volatile cryptocurrencies, stating that they lack legal status and are driven by speculation, exposing them to significant price fluctuations. To ensure compliance with the ban, the regulator will enforce penalties outlined in Article 15 of Law No. 106 of 2013. Those include heavy fines, imprisonment, and bans on conducting activities within the country’s territory.