The ban extends to transactions, investments and mining activities as the Gulf nation seeks to meet FATF requirements.
Kuwait has invoked an “absolute prohibition” on using virtual assets, according to a circular issued by Kuwait’s Capital Markets Authority (CMA) on Tuesday, July 18.
The prohibition extends to both transactions and investments, and it issues a ban against all prospective virtual asset licenses.
It also bans “all virtual currency/asset mining activities” within the country.
The prohibition aims to crack down on money laundering and terrorist financing. The circular outlined that it seeks to comply with Financial Action Task Force’s (FATF) global recommendations for crypto assets.
The FATF however doesn’t require countries to ban crypto, only that they collect and share data on transactions above a certain threshold.
The circular advises that all customers are “constantly aware” of the risks involved with digital assets, even for those conducted outside of the country, “because they do not carry a legal status and are not issued or supported”.
It also claimed that prices of cryptocurrencies are “always driven by speculation that exposes them to a sharp decline”.
Kuwait is an oil-rich country and is one of the six members of the Gulf Cooperation Council (GCC) economic area. Also part of the GCC is the United Arab Emirates, which has taken the opposite approach to Kuwait.
In March, the UAE announced the world’s first digital asset freezone in the emirate of Ras al Khaimah, with applications opening in the second quarter of 2023.
While Dubai regulators recently suspended crypto exchange BitOasis’s licence for failing to meet regulatory standards, Bybit, Binance and Crypto.com are all operating safely within the country, having obtained the sought after MVP licence.
BitOasis outlined in a June 11 blog post that the suspension does not impact its ability to provide broker dealer services to existing retail users because operational MVP License covers institutional and qualified investors, which the exchange is yet to serve.
“We are committed to continuing our close collaboration with VARA. We knew that taking the lead in the ecosystem will come with its unique challenges, and we are glad to be tackling them in close cooperation with our regulator,” it exchange stated.
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