In a collective effort, the regulatory authorities in Kuwait, represented by the Central Bank of Kuwait, the Capital Markets Authority, the Ministry of Commerce and Industry, and the Insurance Regulation Unit, have issued directives to ban the use cryptocurrencies and other unregulated virtual assets within the country.
The Kuwaiti Capital Markets Authority stated in an announcement released on Tuesday that these recommendations are provided by the Financial Action Task Force (FATF) to combat money laundering and terrorism financing. The issued directives impose an “absolute ban” on most digital currency transactions, including their use for payments or investments, as well as the prohibition of mining activities. Additionally, the regulatory authority restricts local authorities from granting licenses to companies seeking to provide services related to virtual assets as business activities.
The announcement states that the comprehensive ban does not include securities and other financial instruments regulated by the Central Bank of Kuwait and the Capital Markets Authority. The primary objective of these directives is to safeguard users from the risks associated with virtual assets. These proactive measures represent a significant step by the Kuwaiti authorities to mitigate the risks linked to investing in such assets, often used for speculative purposes.
The continuous awareness campaigns launched by regulatory authorities in Kuwait caution cryptocurrency users, especially those dealing with popular digital currencies such as Bitcoin (BTC), Ethereum (ETH), Dogecoin (DOGE), and others, about the potential risks associated with their usage and investment.
Moreover, since 2017, the Central Bank of Kuwait has prohibited commercial banks and other financial institutions from processing any transactions involving Bitcoin. In May 2021, the bank reaffirmed the illegality of digital currencies in the country.
Before the ban, Kuwait did not impose taxes on income derived from digital currencies, leaving the door open for investors in the crypto space.
Mining companies had previously shown interest in establishing a base in Kuwait due to its low electricity costs. However, the recent campaign has closed the door on crypto investments and mining activities within Kuwait.