Key Insights:
- Kuwait institutes a complete cryptocurrency ban for national security.
- Concerns over financial crime and stability drive the strict policy.
- Regulators fear cryptocurrencies will enable money laundering and terrorist financing.
Kuwait has strictly prohibited all cryptocurrency activities and services, including trading, payments, and mining. The ban represents one of the most restrictive crypto policies worldwide. It comes from Kuwait’s central bank, Capital Markets Authority, and Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) regulator banding together out of shared concerns over financial crime risks and dangers to the country’s monetary system and national security.
Kuwait’s Concern Over Cryptocurrency
With the new stringent policy, Kuwait’s financial institutions are barred from facilitating any transactions, exchanges, or activities related to digital assets. The ban specifically covers using cryptocurrencies as a payment method, operating as a platform for trading or converting cryptocurrencies, and cryptocurrency mining. Authorities cited cryptocurrencies’ high volatility and speculative nature and their potential to enable financial crime, evasion of capital controls, and other risks to domestic stability and security.
Regulators highlighted the opaque nature of cryptocurrencies, with their inability to identify users and track transactions, as undermining anti-money laundering and counterterrorism financial controls. The anonymity of cryptocurrencies raises fears of enabling not just money laundering but also terrorist financing and other illicit finance, according to authorities. There are also concerns that the rise of cryptocurrencies could undermine the Kuwaiti dinar, interfere with monetary policy, and jeopardize the stability of Kuwait’s traditional financial and banking systems.
While some countries, like the United Arab Emirates, have embraced cryptocurrency technology, Kuwait is cracking down completely by following nearby Saudi Arabia’s lead in virtually banning crypto. The comprehensive ban makes Kuwait one of the most restrictive jurisdictions for digital assets globally. However, crypto advocates argue that this stamps out innovation and prevents people from harnessing the benefits of the technology. Kuwaiti authorities maintain that eliminating cryptocurrency activities is essential for maintaining regulatory control and national security.
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