Kuwait bans cryptocurrency to combat money laundering
Kuwait has declared a ban on cryptocurrency for payments or investments, aimed at thwarting money laundering activities. The Capital Markets Authority (CMA) of the country has introduced a set of regulations that impose an "absolute ban" on the usage of digital currencies in the context of making payments. These regulations go as far as declaring all virtual assets as illegal. Furthermore, the CMA has also disallowed digital asset mining and disavowed crypto as a decentralized form of currency. Businesses are prohibited from offering any services related to cryptocurrencies.
However, it is crucial to note that this prohibition does not apply to securities regulated by the Central Bank of Kuwait or other securities and financial instruments overseen by the Capital Markets Authority, as explicitly stated in the circular.
The Central Bank of Kuwait, together with the Capital Markets Authority, the Ministry of Commerce and Industry, and the Insurance Regulatory Unit, have issued circulars pertaining to the supervision of virtual assets used as a means of payment or recognized as decentralized currency in Kuwait. They have emphasized on abstaining from engaging in transactions that involve virtual currency as a payment method within the boundaries of this prohibition, as reported by Al-Jarida daily.
These circulars are aligned with the recommendations set forth by the Financial Action Task Force (FATF) and the National Committee for Combating Money Laundering and Financing of Terrorism, aiming to enforce the implementation of Recommendation No 15 of the international requirements issued by FATF. As a consequence, dealing with virtual assets as an investment tool is strictly prohibited.
Moreover, it is of utmost importance to refrain from providing any services related to virtual assets to customers, issuing licenses to individuals or entities for offering virtual asset services as a business, either for personal gain or on behalf of others. Notably, no such licenses have been granted previously. The circulars also extend the ban to encompass all virtual currency mining activities.
The CMA stresses that the ban aligns with the guidelines put forth by the Financial Action Task Force on crypto assets and is a direct result of the study conducted by the National Committee for Combating Money Laundering and Terrorist Financing.