Absolute ban on using virtual assets as a payment tool

Four supervisory authorities – the Capital Markets Authority, the Central Bank of Kuwait, the Ministry of Commerce and Industry, and the Insurance Regulatory Unit – which are members of the National Committee for Combating Money Laundering and Financing of Terrorism, have put its foot down when it comes to crypt- and virtual assets. It has committed to an “absolute prohibition” of virtually all crypto operations in the country.

This came within the scope of strengthening efforts to combat money laundering and terrorism financing, and was based on the conclusions of the study prepared by the National Committee for Combating Money Laundering and Financing of Terrorism regarding the required commitment for applying recommendation No. 15 of the international requirements, issued by the Financial Action Task Force (FATF) related to dealing with virtual assets.

The regulatory authorities called on the institutions that subject to their supervision to constantly educate customers about the risks that may result from dealing in virtual assets (which are carried out through transactions outside the State of Kuwait with the knowledge of customers), especially encrypted currencies because they do not carry a legal status, and does not get issued or supported by any government.

Those entities affirmed their commitment to the following:

1. Absolute prohibition of the use of virtual assets as a payment tool/method, or to recognize it as a decentralized currency in the State of Kuwait.

2. It is prohibited to deal with virtual assets as a means of investment. Therefore, it is necessary to refrain from providing this type of services to any of the clients.

3. It is prohibited to issue or grant to any natural or legal person within the State of Kuwait a license to provide virtual asset services as a commercial business for his own benefit or on behalf of others (in addition to the fact that no licenses have been previously issued in this regard).

4. Securities regulated by the Central Bank of Kuwait and other securities and financial instruments regulated by the Capital Markets Authority are excluded from this prohibition.

5. Absolute ban on all virtual currency/asset mining activities.