Kuwait banned all crypto-related activities on July 18, including trading and mining, and prohibited any entity from applying for a digital asset service provider license. The action is in line with the state’s steps to combat money laundering and terrorist financing, the top financial regulator said in the circular.
Cryptocurrencies ‘Have no Legal Status,’ Kuwait Regulator Says
Kuwait announced a cryptocurrency ban on Monday as the Gulf Arab nation ramps up efforts to fight money laundering and terror financing. The move represents a comprehensive prohibition of all crypto-related activities, including payments, trading, and mining, according to the notice posted on the government’s Capital Markets Authority (CMA) page.
In addition, the financial regulator also issued a warning that public companies are not allowed to offer any form of cryptocurrency-related services. The watchdog stressed it had previously never approved a license for crypto services.
“[Cryptocurrencies] have no legal status and are not issued or supported by any government, nor are they linked to any asset or issuer. The prices of these assets are always driven by speculation that exposes them to a sharp decline.”
– the CMA stated in the circular.
The decision comes as Kuwait seeks to ensure compliance with the Financial Action Task Force’s (FATF) global requirements for crypto assets. In addition, the ban follows a crypto-related research report by the National Committee for Combating Money Laundering and Financing of Terrorism, according to the regulator.
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Kuwait’s Approach Toward Crypto Significantly Different from Other Gulf States
Kuwait’s crypto ban may surprise some, given that the Middle Eastern countries have so far been a favorable environment for the nascent industry. For instance, the United Arab Emirates (UAE), Saudi Arabia, and Bahrain have dealt with crypto assets previously.
Last year, Bahrain approved Binance’s application to offer digital asset services in the country, and Saudi Arabia said its $620 billion sovereign wealth fund invested in around 40 US-based venture capital (VC) funds, several of which are crypto and blockchain-oriented.
Similarly, Dubai has been working on its regulatory framework for virtual assets as part of the emirate’s plans to become a digital hub in the region. Earlier this year, Dubai revealed a set of requirements for crypto firms that want to operate in the city, several years after the UAE recognized crypto assets as securities.
Why do you think Kuwait is hostile towards crypto while many other Gulf states remain crypto-friendly?
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