Kuwait’s Capital Markets Authority (CMA) has made a decisive move in the world of cryptocurrencies, officially confirming the “absolute prohibition” of virtually all crypto operations within the country. This announcement came on July 18, as the CMA issued a circular to regulate the supervision and issuance of virtual assets in Kuwait.
The circular makes it abundantly clear that major use cases and operations involving cryptocurrencies, such as payments, investments, and mining, are now strictly prohibited in the state. Local regulators are barred from issuing any licenses that would allow companies to provide virtual asset services commercially. The CMA also urged customers to exercise caution and be aware of the risks associated with virtual assets, particularly cryptocurrencies, emphasizing their lack of legal status and support.
“Cryptocurrencies don’t carry a legal status and are not issued or supported,” stated the CMA, highlighting their speculative nature and susceptibility to sharp declines. Penalties for violating Kuwait’s Anti-Money Laundering laws are well-defined under Article 15 of Law No. 106 of 2013.
The CMA’s move is seen as part of Kuwait’s broader efforts to combat money laundering and terrorist financing. The regulations align with the National Committee for Combating Money Laundering and Financing of Terrorism’s recommendation 15, as set forth by the Financial Action Task Force.
Kuwait’s crypto restrictions are the result of a new inter-departmental ban, with multiple supervisory authorities in Kuwait joining forces to enforce the prohibition. The Central Bank of Kuwait, the Ministry of Commerce and Industry, and the Insurance Regulatory Unit have also issued similar circulars, strengthening the nation’s stance against cryptocurrencies.
On the contrary, other Middle Eastern nations, such as the United Arab Emirates (UAE), have taken a different approach, embracing the cryptocurrency market. In the Gulf region, the UAE stands out as the front-runner in crypto adoption. The country’s ambitious plans to become a global leader in the metaverse ecosystem, backed by cryptocurrencies like Bitcoin (BTC), are poised to boost its economy by a staggering $4 billion and create 40,000 virtual jobs in the next five years.
The Middle East and North Africa (MENA) region have witnessed exponential growth in crypto adoption, with several countries displaying high rates of adoption according to Chainalysis. This surge in interest has motivated Dubai and other regional players to leverage the potential of cryptocurrencies for economic growth and technological advancement.
As Kuwait takes a strict stance against cryptocurrencies, it remains to be seen how this decision will impact the country’s financial landscape and its position in the global crypto sector. While some neighboring countries in the Middle East embrace cryptocurrencies, Kuwait’s “absolute prohibition” reflects its cautious approach, aligning with its commitment to combat financial crimes.