During a summer of celebratory developments in crypto and a month of landmark events, the State of Kuwait is moving in the opposite direction of the parade and bringing a few clouds with it for good measure.
As reported by Cointelegraph, On July 18th, Kuwait’s main financial regulator, the Capital Markets Authority (CMA), issued a notice on the supervision and distribution of virtual assets in the country. This makes Kuwait the latest jurisdiction to ban practically all services and operations dealing with cryptocurrencies.
Virtual assets are defined as any asset that has digital representation of their value, that can be treated or digitally transferred, or can be used for payment or investment purposes, according to the Financial Action Task Force (FATF).
In the notice, the CMA proclaimed its devotion to “absolute prohibition” on major use cases and operations pertaining to cryptocurrencies, including payments, investments, and mining. The notice also bans local regulators from furnishing licenses permitting firms to offer virtual asset services as a commercial business.
Meanwhile, securities and other commercial vehicles regulated by the Central Bank of Kuwait and the CMA are free from the latest embargo, the announcement notes.
Aside from the bans, the CMA also advised customers to be cautious and aware of the risks associated with virtual assets. The regulator particularly flagged cryptocurrencies, arguing that they “don’t carry a legal status and are not issued or supported.”
The CMA went on further to state, “It is not linked to any asset or issuer, and that the prices of these assets are always driven by speculation that exposes them to a sharp decline.”
The punishment for violating Kuwait’s Anti-Money Laundering laws are stipulated in Article 15 of Law No. 106 of 2013 and “subject the parties to all penalties, financial or sentences of imprisonment, which are stipulated in Article (20) of the ministerial resolution,” according to the Central Bank of Kuwait.
Kuwait’s new regulations align with the country’s steps to thwart money laundering and terrorist financing, the regulator stated. The CMA also referred to the findings of a study by the National Committee for Combating Money Laundering and Financing of Terrorism regarding the commitment to applying recommendation 15 by the Financial Action Task Force.
According to local reports, the CMA’s crypto restrictions are part of a new inter-departmental crypto prohibition involving several supervisory authorities in Kuwait. Similar notices have reportedly been issued by the Central Bank of Kuwait, the Ministry of Commerce and Industry and the Insurance Regulatory Unit.
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