Kuwait Imposes Ban on Cryptocurrencies in Accordance with FATF Guidelines

•  Who – Capital Markets Authority in Kuwait has made moves that could dampen crypto operations in Kuwait
•  What – The authority has implemented a comprehensive ban on cryptocurrency operations.
•  When – The circular of the umbrella ban was issued on July 18

The Capital Markets Authority (CMA) of Kuwait has implemented a comprehensive ban on various cryptocurrency operations, including Bitcoin. 

Kuwait’s supervisory authorities, including the Central Bank, Capital Markets Authority, Ministry of Commerce and Industry, and Insurance Regulatory Unit, have taken significant steps in addressing virtual assets within the country.

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Kuwait Implements Sweeping Ban on Cryptocurrencies in Accordance with FATF Recommendations

Kuwait’s regulatory authorities, including the Central Bank, Capital Markets Authority, Ministry of Commerce and Industry, and Insurance Regulatory Unit, have issued circulars in compliance with FATF recommendations, imposing a complete ban on using virtual assets for payment purposes and conducting transactions involving cryptocurrencies as payment instruments.

Circulars have been issued in Kuwait to expand restrictions on cryptocurrency mining activities, aiming to mitigate risks and negative consequences associated with virtual assets. The circulars explicitly prohibit using virtual assets as investment vehicles, highlighting their lack of legal status and government support.

Given the speculative nature of these assets, their value can experience significant fluctuations, further amplifying the associated risks. The Central Bank of Kuwait has also introduced additional measures, mandating prior approval for 46 transactions and procedures conducted by supervised entities to ensure compliance with international codes and economic activity classifications when modifying commercial licenses.

Kuwait’s Comprehensive Crypto Regulations and Their Implications

Kuwait’s regulatory authorities have taken proactive measures to address the growing interest in cryptocurrencies, conducting awareness campaigns to educate the public about the associated risks and lack of supervision. While the ban doesn’t cover regulated securities, the circular emphasizes the need for caution with virtual assets and highlights their speculative nature.

Violating Kuwait’s anti-money laundering laws can result in penalties, aligning with the country’s commitment to combat financial crimes. This move is part of a broader inter-departmental ban on cryptocurrencies, attracting global attention and sparking discussions on the feasibility of banning decentralized finance (DeFi) activities.

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