Recently, the Central Bank of Kuwait, the Capital Markets Authority, the Ministry of Commerce and Industry, and the Insurance Regulatory Unit collectively moved to extinguish cryptocurrency activities within their borderlines, dousing the heat of this blooming market within their region. The decision dances in step with the tune set by the Financial Action Task Force (FATF) to subdue money laundering and terrorist financing.
Kuwait’s financial watchdog – demonstrating a firm stance towards these nascent technologies – has imposed an “absolute prohibition” towards most cryptocurrency-related operations, including payments, investments and mining. Furthermore, a sturdy blockade has been erected against local agencies looking to license companies that offer virtual asset services.
Yet, within this deluge of restrictions, specific exemptions were made. These applied to securities and other financial instruments regulated by the Central Bank of Kuwait and its financial controller – a bittersweet concession for an industry under tight ruling.
Beneath these stringent laws lies a well-intended purpose – protecting investors from the myriad risks harboured in virtual assets. As Kuwait tightens the reins around digital currencies, they hope to shield their citizens from the volatility of these revolutionary yet speculative avenues of investment.
Simultaneously, since no licenses had been issued beforehand to render cryptocurrency services as a business within Kuwait, this outright ban instills a sense of apprehension. Those who dare to disobey these regulatory handcuffs would bear penalties tied directly to money laundering infractions.
Awareness campaigns have also been launched to mitigate the associated risks of dealing with globally recognized cryptocurrencies such as Bitcoin, Ethereum, Dogecoin, among others.
The Central Bank of Kuwait, in 2017, had already disallowed commercial banks and financial bodies from handling transactions disseminated in Bitcoin. It reiterated this stand in 2021, stating unequivocally that cryptocurrencies are not legal tender.
Previously, Kuwait’s lack of a tax on any profits generated from cryptocurrencies had left its doors ajar, beckoning investors. Also, the nation’s low electricity costs had dressed it as an attractive hub for crypto-mining establishments. However, with this recent crackdown, the future of cryptocurrency activities within Kuwait has been thrust into the shadows.
Source: Cryptonews
