Several supervisory authorities — the Central Bank of Kuwait, the Capital Markets Authority, the Ministry of Commerce and Industry, and the Insurance Regulatory Unit — have issued circulars concerning supervision of each of them separately, absolutely prohibiting the use of virtual assets as a tool/means of payment or recognizing them as a decentralized currency in Kuwait, in addition to abstaining from conducting transactions whereby Virtual Currency is used as a payment instrument/method within the scope of this prohibition.
The circulars, which were issued in accordance with the conclusions of the study prepared by the National Committee for Combating Money Laundering and Financing of Terrorism, regarding the required commitment in the field of implementing Recommendation No 15 of the international requirements issued by the Financial Action Task Force (FATF), which prohibits dealing with virtual assets as a means of investment, reports Al-Jarida daily.
Accordingly, it is necessary to refrain from providing this type of services to any of the customers, or to issue or grant any natural or legal person inside Kuwait a license to provide virtual asset services as a business for his benefit, or on behalf of others, noting that no licenses have previously been issued in this regard. The circulars also ban all virtual currency/asset mining activities.
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 indicated that it was 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.
The sources indicated that the local regulatory authorities have warned and carried out awareness campaigns to reduce the risks of dealing or investing in virtual assets or so-called virtual currencies, the most famous of which are “Bitcoin, Ethereum, Dogecoin and others” in light of the continued increase in calls to invest in and deal with these virtual assets which are highly risky and have various negative consequences for dealers, due to their nature and sharp fluctuation in their prices, in addition to not being subject to any supervisory or regulatory authority in the State of Kuwait.