Kuwait’s Capital Markets Authority has banned crypto payments, investments, mining, and the granting of virtual asset licenses in a bid to snuff out money laundering.
Kuwait is stopping crypto payments and other digital asset activities to better comply with the Financial Action Task Force’s Recommendation 15.
Kuwait Extends Earlier Central Bank Ban on Bitcoin Transactions
In addition to the ban, institutions must warn customers of the risks of trading cryptocurrencies, especially with entities outside the nation. Such trading is not legally protected.
Moreover, people or companies violating the law in this regard will face penalties for breaching Article (15) of Law No. 106 of 2013 on Combating Money Laundering and Financing Terrorism. However, securities the central bank regulates, and other instruments overseen by the Capital Markets Authority, are exempt from the exclusion.
Since 2017, the central bank has banned commercial banks and other financial institutions from processing Bitcoin transactions. It reminded the public in a May 2021 statement that cryptocurrencies are not legal tender.
However, the country’s Capital Markets Authority has not enforced a blanket ban on cryptocurrencies until now.
Find out about the top 9 trends shaping cryptocurrency mining.
The move will affect miners enjoying the country’s low electricity costs.
Central Bank Digital Currency to Run on Hyperledger
The central bank has created a task force to study a potential CBDC, Governor Basel A. Al-Haroon confirmed in April.
“Any such issuance would need to be accomplished in a way that preserves monetary and financial stability while maintaining confidence in Kuwait’s payment system.”
According to CBDC Tracker, the retail dinar would run on Hyperledger, an open-source, enterprise-grade blockchain developed by the Linux Foundation. The US Federal Reserve conducted a distributed ledger technology CBDC experiment FooWire on HyperLedger in 2019.
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