The cryptocurrency ecosystem is known to be a volatile market since its advent. It is forever exposed to the threats of the ever-changing market dynamics and a continuous victim of the government’s new rules and regulations.
In light of this, the latest cryptocurrency news is Kuwait putting a ban on all virtual assets. The Capital Market Authority (CMA), Kuwait’s financial regulator has put a ban on all transactions involving cryptocurrencies and virtual assets within its borders on the 18th of July.
This news has left the country’s crypto enthusiasts in absolute shock and has ignited debates on the regulatory landscape of virtual assets globally.
Kuwait’s Ban on Virtual Assets
The state of Kuwait recently got added to the list of countries where the use of virtual assets is prohibited. The country’s financial regulator, CMA issued a circular stating “absolute prohibition” of virtually all cryptocurrency operations in the country. This would mean that the use of any virtual assets like Bitcoin is against the laws of the country and would be considered an offence.
The circular explicitly places a ban on the following:
- Cryptocurrency trading (buying and selling)
- Use of virtual assets as a mode of payment
- Providing any form of services such as mining related to the cryptocurrency industry
The violation of the law will be subjected to penalties under Article 15 of Kuwait’s Anti-Money Laundering law.
Why did Kuwait Impose the Ban?
There are several reasons for imposing a curb on the usage of cryptocurrency in the state as per the regulators. The CMA stated that cryptocurrency operations are not pegged to any asset or issuer and do not carry a legal foundation.
The anonymity of the transactions offered by cryptocurrency is seen to facilitate illegitimate activities like money laundering and terrorist financing, as per the regulators. With the primary aim to reduce such financial crimes and maintain stability, the state has imposed a ban on virtual assets.
The concerns of the state do not end here. The volatility of the cryptocurrency market and the risk it poses to the investor with the sharp drop in the prices remains the second important reason contributing to their decision. The significant step taken to consider crypto operations illicit is also to protect its citizens and the state from the uncertainty associated with the highly speculative nature of the industry.
Impact on the Global Crypto Industry
Undoubtedly the cryptocurrency ecosystem has witnessed exponential growth and acceptance over the years. But it still faces hindrances setting foot in all the jurisdictions of the world and being called a global currency. The ban put by Kuwait on all virtual operations involving cryptocurrencies is an example of such setbacks.
This presents itself as a major challenge to the growth and expansion of blockchain-based services around the world. Businesses looking to establish themselves in the state are now in the continuing hunt for new jurisdiction where the environment is more favorable.
It also adds to the pressure point of the global crypto community patiently awaiting the end of such regulatory turmoil and expecting a stable phase. This cumulatively leads to the loss of talent and capital, marking a roadblock in the technological advancement of the sector.
The prohibition on the use of cryptocurrency in Kuwait is a result of the concerns surrounding the uncertainty in the industry. Regulatory bodies around the globe are still seen struggling to strike the balance between technological innovations and financial regulations. Countries are either adopting a lenient approach focusing more on advancement or a restrictive approach believing to acquire financial stability.
The outcome of such regulatory measures remains unknown however it is likely to have a withholding effect on the future of the cryptocurrency industry.
Disclaimer: This article was created for informational purposes only and should not be taken as investment advice. An asset’s past performance does not predict its future returns. Before making an investment, please conduct your own research, as digital assets like cryptocurrencies are highly risky and volatile financial instruments.
