The Capital Markets Authority (CMA), Kuwait’s main financial regulator, has issued a circular banning all operations involving cryptocurrencies like Bitcoin (BTC) in the country. The circular, released on July 18, confirms the CMA’s commitment to an “absolute prohibition” on major use cases and operations involving cryptocurrencies, including payments, investments, and mining.
Furthermore, the circular also prohibits local regulators from issuing licenses to firms for providing virtual asset services as a commercial business. However, the prohibitions do not apply to securities and other financial instruments regulated by the Central Bank of Kuwait and the CMA.
In addition to the bans, the CMA has emphasized the risks associated with virtual assets and urged customers to exercise caution. It has specifically highlighted cryptocurrencies, stating that they do not carry legal status and are not issued or supported by any entity or asset. The regulator has also noted that the prices of cryptocurrencies are driven by speculation, making them susceptible to sharp declines.
The CMA has highlighted that violating Kuwait’s Anti-Money Laundering laws, as stipulated in Article 15 of Law No. 106 of 2013, can result in penalties. The new regulations align with Kuwait’s measures to combat money laundering and terrorist financing, as stated by the regulator. The CMA has referred to a study conducted by the National Committee for Combating Money Laundering and Financing of Terrorism, which emphasizes the commitment to apply recommendation 15 by the Financial Action Task Force.
Reports suggest that the CMA’s cryptocurrency restrictions are part of a broader ban involving multiple supervisory authorities in Kuwait. Circulars similar to the one issued by the CMA have been released by the Central Bank of Kuwait, the Ministry of Commerce and Industry, and the Insurance Regulatory Unit.
As the global regulatory landscape for cryptocurrencies continues to evolve, jurisdictions like Kuwait are enacting measures to address the potential risks associated with these digital assets. The ban on cryptocurrencies in Kuwait comes in response to concerns about illicit activities such as money laundering and terrorist financing. By imposing these restrictions, Kuwait aims to strengthen its anti-money laundering efforts and maintain financial stability.
It is worth noting that while regulations like these may temporarily hinder the growth of the cryptocurrency industry, they also reflect a growing recognition of the need to strike a balance between innovation and regulation. As the technology matures, regulators will continue to adapt their approaches to ensure the proper oversight and protection of investors and the financial system as a whole.
In conclusion, Kuwait’s Capital Markets Authority has joined other jurisdictions in banning operations involving cryptocurrencies. The circular prohibits major use cases and operations related to cryptocurrencies, while also emphasizing the risks associated with these assets. By implementing such restrictions, Kuwait aims to combat money laundering and terrorist financing while safeguarding its financial system. These regulations highlight the increasing need for regulatory frameworks to govern the emerging cryptocurrency industry. As the sector continues to evolve, it is expected that more jurisdictions will introduce measures to ensure investor protection and maintain financial stability.
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