The regulatory authorities in Kuwait have now imposed an absolute ban on all cryptocurrency-related activities under their jurisdiction. On this front, the Central Bank of Kuwait in association with the Capital Markets Authority and joined by the Ministry of Commerce and Industry has issued a combined ruling.
Another important state entity to join the anti-crypto alliance is Insurance Regulatory Unit. All these government agencies and departments have issued a joint circular on the matter that deals with the matter of bringing a complete ban on the virtual asset industry of the Middle Eastern Country.
However, these recent changes are not a mere coincidence or driven by internal government deliberation. On the contrary, the regulations imposed by the Financial Action Task Force or FATF have played an important role in relegating these strict banning impositions to the cryptocurrency sector.
FATF has maintained that these limiting regulations are part of the plan to combat global money laundering and terror financing schemes. FATF has imposed similar restrictions on various nations concerning crypto regulations and the government of Kuwait has finally implemented them Tuesday this week.
Kuwait will not Issue Licenses to Crypto Companies
It seems that Kuwait has taken a page out of China from 2021 when it cracked down on the local crypto sector. Media reports have revealed that with the latest changes, the government of the Middle Eastern nation has imposed a ban on various cryptocurrency activities under its jurisdiction including but not limited to payments, trading, and mining.
At the same time, the financial regulators in the country are no longer allowed to issue practice licenses to these crypto enterprises.
The state alliance mentioned before that has imposed these limitations has made it clear that traditional trading entities such as securities are exempted from these latest changes. Such that the trading instruments that are registered and/or issued by the Central Bank of Kuwait as well as the financial regulators have immunity from the ban.
The anti-crypto government alliance has declared that the main reason for introducing these restrictions is to protect the interests of the citizens from speculative and volatile virtual assets.
The authorities in Kuwait have maintained that the investors in the country who have access to cryptocurrency trading instruments should have awareness. The regulatory decree has maintained that many investors do not have sufficient information about the risks associated with virtual currency dealings.
At the same time, state officials have maintained that there are exponential risks that are associated with privacy tokens or encrypted coins that pose a threat to investors on account of unclear legal status.
On the other hand, Kuwait regulators have not issued a license to any cryptocurrency enterprise in the region to date. It means that before the introduction of the current stringent restrictions, there were no crypto companies in the region that were operating as recognized businesses.
Since 2017 the Central Bank of Kuwait banned commercial banking enterprises to process any crypto-related transactions. However, since cryptocurrencies are unregulated assets in the country, therefore, the government does not impose or collect any taxes on crypto profits.
Nevertheless, crypto mining enterprises have been trying to open their establishments in the region to benefit from cheap electricity costs.