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The government of Kuwait banned all crypto-related activities on July 18th, including mining, trading, and granting licences to digital asset providers. State regulators have outlined the action as part of their efforts to combat terrorist financing and money laundering.
Kuwait is ramping up efforts to combat money laundering and terrorist financing, including the banning of cryptocurrency on July 18th. As stated on the government’s Capital Markets Authority (CMA) website, cryptocurrency-related activities, such as payments and trading, will be prohibited.
Furthermore, the financial regulator has warned that it is forbidden for public companies to provide any cryptocurrency-related services. A licence for crypto services had never previously been approved by the watchdog.
According to the CMA, “[Cryptocurrencies] have no legal status and are not issued or supported by any government, nor are they linked to any asset or issuer. These assets are always driven by speculation that exposes them to sharp declines.”
The decision was made as Kuwait sought to comply with the global requirements for crypto assets established by the Financial Action Task Force (FATF). The National Committee issued a report on crypto-related issues for combating terrorist financing and money laundering prior to the introduction of this ban.
Kuwait’s crypto ban may come as a surprise to some since Middle Eastern countries have previously supported the nascent crypto industry. UAE, Saudi Arabia, and Bahrain have also dealt with crypto assets previously.
Several crypto and blockchain-oriented venture capital funds have been invested by Saudi Arabia’s $620 billion sovereign wealth fund. It has recently been announced that Bahrain has granted Binance’s application to operate in the country, and Saudi Arabia has announced an investment of around $40 million in US VC firms. Accordingly, Dubai has been developing a regulatory framework for virtual assets as part of its efforts to become a regional hub for digital assets. After recognising crypto assets as securities several years ago, Dubai has announced a set of requirements for crypto firms seeking to operate in the city.