Kuwait bans virtual currency transactions

The regulatory authorities in Kuwait, including the Central Bank, the Capital Markets Authority, the Ministry of Commerce and Industry, and the Insurance Regulatory Unit, have imposed a ban on all virtual currency transactions.

Official circulars were issued prohibiting the use of virtual assets as means of payment, recognizing them as a decentralized currency in Kuwait, and refraining from conducting transactions that use virtual currency as a payment method, reports Al- Jarida daily.

The new regulation comes following the findings of a study by the National Committee for Combating Money Laundering and Financing of Terrorism. The circulars also stipulate that it is imperative to refrain from providing any type of services related to virtual assets to customers, or to issue or grant any individual or legal entity in Kuwait a license to provide virtual asset services for their benefit, or on behalf of others. Notably, no such licenses have been previously issued. The ban extends to all activities related to virtual currency or asset mining.

Sources have warned about the risks associated with dealing in virtual assets, especially cryptocurrencies such as Bitcoin, Ethereum, Dogecoin, and others, which do not have legal status and are not issued or supported by any government. The volatile nature of these currencies, driven by speculation, can lead to sharp price declines and pose significant risks for investors.

Meanwhile, informed sources told the daily that virtual assets are a form of currency trading, and it is a digital currency, as it is the closest analogy to the financial situation that exists in virtual assets. The sources emphasized that customers are constantly aware of the risks that may result from dealing in virtual assets, which are carried out through transactions carried out outside the State of Kuwait by customers, especially encrypted currencies, because they do not have a legal status and are not issued or supported by any government. It is not linked to any asset or issuer, and the prices of these assets are always driven by speculation that exposes them to a sharp decline.