No, no and no. While some countries, such as the United Statescontinue to prevaricate, while others, like SingaporeWhile some countries have decided to officially regulate certain crypto-related practices, there are still states that reject anything remotely related to crypto. Visit Kuwait is definitely in the latter category, and the national regulator has just confirmed this with a circular on the subject. The Capital Markets Authority (CMA) persists and signs, and doesn’t want crypto for its citizens. Head north to the Persian Gulf to see what’s wrong with digital currencies.
Means of payment, investment or mining: the little monarchy says no to cryptos
In a circular published earlier this week, the CMA is quite clear and doesn’t beat about the bush, confirming that « the absolute prohibition of all crypto-related activities ».. It couldn’t be clearer.
The document states in black and white that the use of crypto as a means of payment is strictly forbidden. Similarly, it is forbidden to consider virtual assets as an investment, and therefore to offer them to customers. Moreover, no such license will be granted to any individual or legal entity to provide this type of service. Finally, mining activities are also included in this « absolute ban ».
The only exception seems to concern financial securities already regulated by the Central Bank of Kuwait and by the CMA, but not much detail. For the rest, it’s no, no and no! At the time of justify its choices, the same reasons are always put forward by the authorities, namely the user protection against a highly speculative sector and the fight against money laundering.
The circular reminds us of the requirements of the Financial Action Task Force (FATF) in the fight against money laundering, but also in the fight against terrorism. In conclusion, the CMA also warns his fellow citizens against buying such virtual assets via international platformsand reminds us of the possible legal proceedings to which offenders may be exposed in the event of non-compliance with this circular.
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Kuwait is the exception in the Persian Gulf
More important than compliance with the law, however, is protecting potential investors from themselves. Indeed, these crypto-assets are not far from being the evil incarnateaccording to the CMA:
« Customers should be aware of the share of risk that may result from trading virtual assets (…), particularly cryptocurrencies, as they have no legal status and are neither issued nor backed by any government. What’s more, they are not linked to any asset or issuer. And prices are always driven by speculation, which exposes them to sharp declines. »
The unfavorable position of this small state on the Arabian Peninsula denotes slightly from the rest of the subregion, with which other countries seem more inclined to take advantage of the benefits offered by cryptocurrency. Dubai is, for example, well on its way to becoming a crypto stronghold. And the United Arab Emirates as a whole take a keen interest in the subject.
It now remains to be seen how the Kuwait will apply this law, and how long it will take the authorities to reverse this rather radical decision. All the more so as, with all the oil extracted in the country, Bitcoin could, for example, be used to limit waste energy. But apparently, they don’t know yet.
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