Kuwait Cracks Down on Crypto: Ban on Payments, Investment & Mining

• Kuwait has issued a circular prohibiting the use of crypto for payments, investments and mining.
• The prohibitions are an effort to comply with the FATF’s global recommendations for crypto assets.
• Violations of these regulations will be met with penalties.

Kuwait Cracks Down on Crypto

Kuwait has issued a circular that prohibits the use of crypto for payments, investments and mining in order to meet requirements set by the Financial Action Task Force (FATF) on preventing money laundering through crypto assets.

Payments Prohibited

The Capital Markets Authority has placed an “absolute” ban on all digital asset mining, prohibited the recognition of cryptocurrency as decentralized currency, and also warned the public that companies are not allowed to provide any type of crypto-related services. 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.

FATF Compliance

The prohibitions are aimed at coming into compliance with the FATF’s global recommendations for crypto assets, and followed a study into the sector by the National Committee for Combating Money Laundering and Financing of Terrorism. Although countries are required to put up guardrails for preventing money laundering, and adhere to the FATF’s travel rule – which requires crypto firms to collect and share data on transactions above a certain threshold –the international watchdog has not asked countries to ban cryptocurrencies.

Warnings Issued

The regulator warned citizens of the risks involving volatile, encrypted currencies that do not have legal status. Any violations of these prohibitions would result in penalties, according to notice released by CMA.

Summary

In summary, Kuwait has prohibited using cryptocurrencies for payments or investment in order to combat money laundering according to its financial regulator’s circular issued on Monday. This is being done in order comply with FATF’s global recommendations regarding cryptocurrencies while warning citizens about potential risks involving unregulated digital currencies that lack legal status should they violate these new regulations; resulting in penalties from CMA