Kuwait’s supervisory authorities, including the Central Bank of Kuwait, the Capital Markets Authority, the Ministry of Commerce and Industry, and the Insurance Regulatory Unit, have jointly issued circulars to address the use and recognition of virtual assets within the country.
The circulars, reported by Al-Jarida Daily, are in accordance with the recommendations set forth by the Financial Action Task Force (FATF) in Recommendation No. 15 to combat money laundering and the financing of terrorism.
The circulars explicitly ban the use of virtual assets as a tool or means of payment and prohibit any transactions involving cryptocurrency for payment purposes. In addition, they impose a ban on conducting transactions where cryptocurrencies are utilised as payment instruments or methods.
A key aspect of the circulars is the prohibition of virtual assets being used as a means of investment. The authorities underscore the risks involved in dealing with virtual assets, highlighting their lack of legal status and government backing. The prices of these assets are often driven by speculation, which makes them susceptible to sharp declines.
The regulatory authorities emphasised that no licenses have been issued to provide virtual asset services as a business within Kuwait, and they strictly prohibit granting licenses for such services to individuals or entities. The circulars extend their restrictions to encompass all cryptocurrency mining activities within the country.
By doing so, the authorities aim to reduce the risks and negative consequences associated with investing or dealing in virtual assets.
In response to the increasing interest in virtual assets and cryptocurrencies like Bitcoin, Ethereum, and Dogecoin, the local regulatory authorities have conducted awareness campaigns to educate the public about the potential hazards of these assets’ highly volatile nature and the lack of supervision or regulation within Kuwait.
In a separate matter, the Central Bank of Kuwait has specified 46 transactions and procedures that require its prior approval before being executed by companies, banks, and entities under its supervision.
These transactions include various actions involving joint-stock companies, public and closed, as well as companies subject to the bank’s supervision.
The bank stressed on the importance of adherence to international codes and classification of economic activities when adding or changing activities in commercial licenses.