SNEAK PEEK

• Kuwait’s regulatory authorities jointly issue a ban on virtual assets.
• The ban is aligned with the Financial Action Task Force’s (FATF) Recommendation No 15.
• Local regulators are conducting awareness campaigns on digital asset perils.

To enhance its financial security and safeguard its citizens, Kuwait’s major regulatory bodies have united to ban virtual assets outright. The prohibition covers not only the use of these assets as a medium of exchange but also dismisses them as recognized decentralized currencies within Kuwait.

As reported in the Arab Times, this joint decision was shaped by the National Committee for Combating Money Laundering and Financing of Terrorism’s research and based on Recommendation No 15 by the Financial Action Task Force (FATF). The FATF’s international requirements explicitly discourage using virtual assets as investment instruments.

The Central Bank of Kuwait, Capital Markets Authority, Ministry of Commerce and Industry, and the Insurance Regulatory Unit underlined that it is crucial to avoid offering services involving virtual assets to any client. This extends to the prohibition of licensing for anyone, be it a natural or legal person, to provide virtual asset-related services for personal profit or on others’ behalf. Remarkably, the ban also encompasses all virtual asset or cryptocurrency mining activities.

People familiar with the matter stressed the need for customer awareness regarding virtual assets. This concern stems particularly from transactions involving encrypted currencies executed outside of Kuwait by customers. These assets have no legal standing, are unsupported by any government, and are untethered from any asset or issuer, which leaves their values vulnerable to speculative volatility.

In response, local regulators have been conducting awareness campaigns highlighting the dangers of investing in well-known virtual assets such as Bitcoin, Ethereum, and Dogecoin. This move comes in response to the rising interest in these volatile assets, which pose considerable financial risks due to their erratic price fluctuations and the absence of regulatory oversight in Kuwait.