On July 18, 2023, the Capital Markets Authority of Kuwait reaffirmed its firm stance on the prohibition of crypto assets and mining activities within the Gulf state. The circular, issued by the regulator responsible for financial instruments and securities, emphasized the necessity of adhering to these rules in alignment with efforts to combat money laundering and terrorist financing, as well as to comply with the recommendations and standards of the Financial Action Task Force.
In the latest announcement, Kuwait’s regulator underlined five critical rules that strictly prohibit the use of virtual assets as a method of payment. Furthermore, engaging with crypto assets as an investment vehicle is strictly forbidden for businesses in the Gulf state, and they are prohibited from offering such services to their customers. Additionally, any involvement in crypto asset mining or related activities is strictly prohibited for both Kuwaiti citizens and businesses.
The Capital Markets Authority is not taking the matter lightly, warning businesses of severe consequences for non-compliance with the crypto asset ban. Penalties may include the revocation of their business license. To further protect consumers, Kuwaiti businesses are urged to educate their customers about the potential risks associated with dealing in crypto assets, which are not prohibited outside the borders of Kuwait.
The circular makes it clear that crypto assets hold no legal tender status, lack support from any government or asset issuer, and are subject to price volatility driven by speculation, making them susceptible to sudden drops in value.
Frequently Asked Questions (FAQs) about crypto prohibition
Q: What is the latest circular released by the Capital Markets Authority of Kuwait?
A: The latest circular released by the Capital Markets Authority of Kuwait reaffirms the strict ban on crypto assets and mining activities within the Gulf state. It emphasizes the importance of complying with the regulations to combat money laundering and terrorist financing, aligning with the Financial Action Task Force recommendations and standards.
Q: What are the critical rules underscored by Kuwait’s regulator in the circular?
A: Kuwait’s regulator underscores five critical rules in the circular. These rules include an absolute prohibition of using virtual assets as a payment instrument/method. Additionally, businesses in Kuwait are forbidden from engaging with virtual assets as an investment vehicle, and they must avoid offering this type of service to any customers. Furthermore, crypto asset mining and related activities are strictly prohibited, and both Kuwaiti citizens and businesses must abstain from participation.
Q: What are the potential penalties for businesses violating the crypto prohibition rules in Kuwait?
A: Any business found violating the regulator’s crypto prohibition rules may face penalties, including the potential loss of their business license. The Capital Markets Authority is taking non-compliance seriously to maintain financial integrity and protect consumers.
Q: What is the stance of Kuwait’s Capital Markets Authority on the nature of crypto assets?
A: Kuwait’s Capital Markets Authority insists that crypto assets are not legal tender, are not issued or supported by any government or asset issuer, and their prices are always driven by speculation that exposes them to sharp drops in value. This underlines the regulator’s concerns about the inherent risks associated with dealing in cryptocurrencies.
Q: What is the objective of Kuwait’s regulator in educating customers about crypto assets?
A: The regulator aims to protect consumers by urging Kuwaiti businesses to educate their customers about the potential risks of dealing with crypto assets. This is essential as crypto assets are used beyond the borders of Kuwait, and customers need to be aware of the risks associated with their use.
More about crypto prohibition
- Capital Markets Authority of Kuwait
- Financial Action Task Force (FATF)
- Law No. 106 of 2013 (Arabic source)