Kuwait’s Ministry of Finance has reportedly refused to acknowledge or recognize bitcoin and has banned financial institutions from trading with the cryptocurrency.
Citing sources, an Arab Times report revealed that the ministry and the Central Bank of Kuwait have forbidden the banking sector and companies under its regulatory purview from trading in bitcoin – after the explosive growth in the popularity and demand for bitcoin this year.
Curiously, the publication’s sources also confirmed that both the ministry and the central bank have no authority to punish trading – presumably among everyday adopters and retail investors – since they do not recognize the cryptocurrency. There would be no regulatory moves either since bitcoin trading occurs over the internet and “is therefore out of control of any supervisory authority.”
As a result, the lack of backing or guarantee by the banking system, sources said, has seen the central bank push Kuwait’s Ministry of Commerce and Industry to notify adopters and investors of the risks involved in investing in bitcoin.
Kuwaiti laws do not prohibit online trading of cryptocurrencies since they fall under e-governance laws linked to e-programs, an Arab Times report revealed earlier this week. The report also suggested that citizens in the Emirate are at the “forefront of buying and selling bitcoins” after the cryptocurrency’s meteoric gains this year. “However, the proceeds of Bitcoin that are wired from abroad to Kuwait are considered as illegal and unclean money, because the Kuwaiti law does not consider those currencies,” sources from Kuwait’s Public Prosecution warned.
Because of that, the people who deal with Bitcoins are subject to questioning about the money and its source based on the Money Laundering Law because it is money from unknown sources.
In nearby Bahrain, a constitutional monarchy of over 30 islands that shares the Persian Gulf with Kuwait, the government is taking a friendlier, open-minded stance to cryptocurrencies. “We are open to Bitcoins,” said Bahrain’s Economic Development Board chief executive Khalid Al Rumaihi earlier this year.
Further south, the UAE saw one of its earliest bitcoin exchanges with the launch of iGot, in 2014. In 2016, a female Jordianian entrepreneur launched BitOasis, a bitcoin wallet and exchange in Dubai. Fears of a ‘bitcoin ban’ following new regulations released by the Central Bank of the UAE in January this year were ultimately quelled after the central bank clarified that new regulations did not cover ‘virtual currencies’ under new laws.
Kuwait city image from Shutterstock.