Kuwait recently announced that it would enforce an absolute ban on all crypto-related activities, including payments, mining, and investments. The Capital Markets Authority of the State of Kuwait circulated a notice earlier this week, declaring the prohibition on crypto and virtual assets transactions.
According to the circular issued by Kuwait’s market regulator, the ban on crypto was enforced in an effort to combat money laundering and terrorist financing in the Middle Eastern nation. The country’s National Committee for Combating Money Laundering and Terrorist Financing recently carried out a study that concluded that crypto played a considerable role in such illicit activities.
Kuwait’s ban on crypto was also prompted by the Financial Action Task Force (FATF), a global money laundering and terrorist financing watchdog. The FATF previously laid out guidelines for a risk-based approach to virtual assets and virtual asset service providers. Last month the regulator published a targeted update on the implementation of the FATF standards on crypto.
The ban on crypto made Kuwait compliant with FATF’s international norms for dealing with digital assets. The ban prohibits the use of virtual assets as a payment method since crypto is no longer recognized as a decentralized currency in the country. The market regulator also prohibited the use of crypto assets as an investment vehicle and stated that no license would be issued to crypto entities in the country.
The State of Kuwait further announced an absolute ban on crypto mining activities and urged customers to be aware of the risks associated with digital assets and associated products. Interestingly, the circular mentioned an exception for securities regulated by the Central Bank of Kuwait and other securities and financial instruments regulated by the country’s Capital Markets Authority. The exclusion of these assets indicated that Kuwait may unveil Central Bank Digital Currencies (CBDCs) in the future, which would not be prohibited under the updated rules.
