Kuwait’s Central Markets Authority Ban Crypto Activities: Understanding the New Regulations

Kuwait, a nation in the Middle East, has recently made a significant move in the realm of cryptocurrency regulation.

On July 19, the Central Markets Authority (CMA), Kuwait’s financial watchdog, issued a circular declaring all cryptocurrency activities, including investment, payments, and mining, illegal in the country.

The circular also prohibits local regulators from granting licenses to those intending to offer cryptocurrency services as a commercial business.

Kuwait’s financial regulator, the CMA, has unequivocally banned all cryptocurrency-related activities within the country. This prohibition encompasses crypto investment, payments, and even mining operations.

In addition, the CMA has explicitly forbidden local regulators from licensing individuals or businesses attempting to provide cryptocurrency services as a commercial venture.

The circular issued by the CMA has highlighted the nation’s stringent anti-money laundering and terrorist financing laws, which carry harsh punishments for those who defy the cryptocurrency ban.

The warning serves as a stern message to potential violators, emphasizing the gravity of the consequences they may face.

Amidst the comprehensive ban, the CMA clarified that securities regulated by the Central Bank of Kuwait and other financial instruments regulated by the Capital Markets Authority remain exempt from these prohibitions.

This distinction ensures that traditional financial instruments continue to operate under the existing regulatory framework.

In addition to implementing the ban, Kuwait’s financial regulator has taken a proactive approach to educating the public about the risks associated with cryptocurrencies.

The circular emphasized that cryptocurrencies do not carry legal status and are neither issued nor supported by any official authority in the country.

This advisory aims to protect consumers from potential financial losses and fraudulent schemes related to cryptocurrencies.

Kuwait has now joined a growing list of countries, including Thailand, Indonesia, and Turkey, that have prohibited cryptocurrency payments. These nations have opted for a cautious approach towards the acceptance of digital currencies as a means of payment within their borders.

Kuwait’s decision to ban cryptocurrencies aligns with the study conducted by the National Committee for Combating Money Laundering and the Financing of Terrorism.

The study aimed to implement Recommendation 15 of the International Requirements of the Financial Action Task Force (FATF).

However, it’s essential to note that the FATF does not explicitly mandate nations to outlaw cryptocurrencies; instead, it emphasizes the importance of regulating the sector to combat illicit financial activities effectively.