Kuwait has banned financial institutions from cryptocurrency as it refused to acknowledge or recognize bitcoin as legitimate currency.
According to reports in the local media, Ministry of Finance and the Central Bank of Kuwait have asked banking sector and companies under its regulatory purview not to go ahead with any sort of transactions or trading in bitcoin. This is surprising as neither of the two regulatory bodies have any authority over punishing trade – presumably among everyday adopters and retail investors – since they do not recognize the cryptocurrency.
We don’t expect anything to happen on the regulatory front in the country since bitcoin and cryptocurrency trading occurs over the internet and “is therefore out of control of any supervisory authority.”
Further, the country’s central bank has also asked the Kuwait’s Ministry of Commerce and Industry to join them in their movement to ban bitcoin and notify adopters and investors of the risks involved in investing in bitcoin.
While online transaction come under the purview of e-governance laws linked to e-programs, the issue becomes more complicated when the money flows into the country from the outside as a result of the trades carried out by those inside the country. This effectively means that proceeds of Bitcoin wired to Kuwait from abroad are considered as illegal and unclean money, because the Kuwaiti law does not consider those currencies.
This means that people who are recipients of the money through bitcoin trading could be subject to questioning about the money and its source based on the Money Laundering Law because it is money from unknown sources.
The stance adopted by nearby Islamic countries isn’t the same as Kuwait. Bahrain has adopted a much 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.
UAE too has been a friend of sorts to bitcoin and cryptocurrencies. UAE was home to one of the 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.