In a direct challenge to the global stride towards crypto adoption, the state of Kuwait has gone the opposite way with an “absolute prohibition” on almost all cryptocurrency operations in the country. In a circular from the country’s primary financial regulator, the Capital Markets Authority (CMA), they clarified the ban to include cryptocurrency payments, investments and even mining activities.
Interestingly, traditional securities and financial instruments still under the control of the Central Bank of Kuwait and the CMA are excluded from the latest prohibitions. But for the crypto enthusiasts and those who saw digital assets as a viable alternative to the traditional financial system, this can be seen as a major blow.
Despite the apparent finality, the CMA also took this opportunity to warn customers about the risks associated with handling virtual assets. Specifically, they singled out cryptocurrencies, explaining that they “don’t carry a legal status and are not issued or supported.”
These actions seem to align with recent efforts by Kuwait to combat money laundering and terrorist financing, referencing a study by the National Committee for Combating Money Laundering and Financing of Terrorism. The resulting penalties for breaching these domestic Anti-Money Laundering laws are documented in the Article (15) of Law No. 106 of 2013.
Echoing the CMA’s stance, several other regulatory bodies in Kuwait have reportedly issued similar circulars. These include the Central Bank of Kuwait, the Ministry of Commerce and Industry, and the Insurance Regulatory Unit.
While the prohibition is a significant setback for crypto investors and enthusiasts in Kuwait, the decision could leave room for further debate. The disparity between traditional financial instruments and cryptocurrencies might stir discussions in the community over whether or not the decision will effectively combat money laundering and terrorist financing.
As the crypto space continues to evolve, the lines distinguishing the traditional financial system from the digital sphere are blurring. Consequently, regulations must also advance to keep pace. It will be intriguing to see how the cryptocurrency industry adapts to Kuwait’s current stance and whether other jurisdictions might follow suit.
Source: Cointelegraph
