Amidst the growing acceptance of cryptocurrencies in the Middle East, one country appears to be taking a different path. Kuwait’s primary financial regulator, the Capital Markets Authority [CMA], recently released a circular declaring an “absolute” ban on all activities related to digital assets, including mining, transactions, and investments.
Furthermore, the circular also restricted local regulators from giving out licenses to businesses offering crypto-related services for commercial purposes. Along with the prohibitions, the CMA emphasized the importance of customer vigilance regarding the risks associated with these assets. The regulator specifically highlighted that cryptocurrencies lack legal status and that no authority issues or backs them. The circular further read,
“It is not linked to any asset or issuer, and the prices of these assets are always driven by speculation that exposes them to a sharp decline.”
Why is Kuwait taking such an anti-crypto step?
The Central Bank of Kuwait has been quite hostile towards crypto. Back in 2021, the bank issued a warning against crypto investments.
The latest move aligns with Kuwait’s larger initiative to combat money laundering. Reports indicate that the CMA’s restrictions on crypto assets are part of a broader inter-departmental crypto ban. This involves several supervisory authorities in Kuwait. Similar circulars have been released by the Central Bank of Kuwait. The Ministry of Commerce and Industry, and the Insurance Regulatory Unit were also doing the same.
Nonetheless, it is worth noting that the latest prohibitions do not apply to securities and other financial instruments. However, as stated in the announcement, the Central Bank of Kuwait and the CMA demand regulation of these entities. However, the regulator highlighted that the penalties for violating Kuwait’s Anti-Money Laundering laws are specified in Article 15 of Law No. 106 of 2013.