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Kuwait

Retail_Trading_Status

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#496
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2025-06-26 13:16
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Executive Summary

Retail cryptocurrency trading is effectively banned in Kuwait due to circulars issued by the Central Bank of Kuwait (CBK) and the Capital Markets Authority (CMA) in July 2023. These directives prohibit financial institutions from facilitating cryptocurrency transactions, forbid the use of virtual assets as payment or investment tools, and prevent the issuance of licenses for virtual asset services. The rationale for the ban is primarily to combat money laundering and terrorist financing, aligning with FATF recommendations. Despite the ban, some peer-to-peer (P2P) trading may occur through unregulated channels, although this is outside the legal framework.

Key Pillars

The primary regulators are the Central Bank of Kuwait (CBK) and the Capital Markets Authority (CMA), which have issued circulars to prohibit cryptocurrency-related activities. Key compliance requirements revolve around Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) laws, specifically Law No. 106 of 2013, which mandates customer due diligence (CDD) and suspicious transaction reporting (STR). There are explicit prohibitions on issuing licenses for virtual asset services.

Landmark Laws

  • July 2023, Capital Markets Authority (CMA) Circular: Announced a complete ban on most cryptocurrency-related activities, including payments, investments, and mining. It includes prohibiting local regulators from licensing businesses to provide services related to virtual assets. Stipulated an "absolute prohibition of using virtual assets as a payment instrument/method" and forbidding Kuwaiti businesses from engaging with virtual assets as an investment vehicle or "offering this type of service to any customers."
  • July 2023, Joint Regulatory Circulars: The Central Bank of Kuwait, the Capital Markets Authority (Circular No. (10) of 2023), and Kuwait's Insurance Regulatory Unit (Circular No. (6) of 2023) issued an “absolute prohibition” on dealing in virtual currencies. This includes strictly prohibiting using virtual assets as a payment method or recognizing them as a decentralized currency, prohibiting dealing with virtual assets as a means of investment, banning offering related services, and completely banning all virtual asset and crypto-currency mining activities.
  • Law No. 106 of 2013: The primary AML/CFT legislation, providing a general framework for financial transactions and requiring customer due diligence (CDD) and suspicious transaction reporting (STR).

Considerations

Cryptocurrencies are treated as virtual assets, and their use as payment instruments or investment tools is prohibited. The rationale for the ban centers on combating money laundering and terrorist financing, though the FATF itself has not called for outright bans. Operational challenges include the restriction on local businesses offering crypto services and on financial institutions facilitating such transactions, making legitimate retail trading within Kuwait practically impossible. Risks include volatility and potential for illicit use, as highlighted by the CBK.

Notes

In May 2021, the CBK issued warnings about the risks associated with cryptocurrencies. Despite the ban, reports suggest peer-to-peer (P2P) trading may still occur through unregulated channels, with Crystal Intelligence reporting daily volumes exceeding KWD 3 million on platforms like Binance P2P in late 2024. Recent crackdowns on illegal crypto mining operations in April and May 2025, citing violations of various laws and strain on the electricity grid, further demonstrate the government's prohibitive stance. There are no mentions of future plans for CBDCs or regulatory sandboxes in the provided text.

Detailed Explanation

Retail cryptocurrency trading is banned in Kuwait, as evidenced by circulars and statements from the Central Bank of Kuwait (CBK) and the Capital Markets Authority (CMA). The CMA, in July 2023, announced a complete ban on most cryptocurrency-related activities, including payments, investments, and mining, prohibiting local regulators from licensing businesses to provide services related to virtual assets. This ban was further reinforced by joint regulatory circulars issued on July 17, 2023, by the CBK, CMA (Circular No. (10) of 2023), and the Insurance Regulatory Unit (Circular No. (6) of 2023), which instituted an “absolute prohibition” on dealing in virtual currencies. These prohibitions include strictly forbidding the use of virtual assets as a payment method, prohibiting their use as a means of investment, banning related services, and completely banning virtual asset mining activities.

Prior to the outright ban, in May 2021, the CBK issued a statement cautioning against dealing in crypto-assets, citing risks like volatility, potential for illegal use of funds, unauthorized transactions, and money laundering. The current regulatory stance aims to combat money laundering and terrorist financing, aligning with FATF recommendations.

The primary legislation governing financial transactions is Law No. 106 of 2013, which pertains to Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT). This law requires customer due diligence (CDD) and suspicious transaction reporting (STR) by financial institutions and designated non-financial businesses. However, the 2023 circulars specifically addressing virtual assets take precedence.

Enforcement actions include crackdowns on illegal crypto mining operations. In April and May 2025, the Ministry of Interior (MoI) stated that crypto mining is illegal and unlicensed, violating key laws and straining the electricity grid. Despite the ban, there are indications that peer-to-peer (P2P) trading continues through unregulated channels. Crystal Intelligence reported that P2P trading exceeded KWD 3 million in daily volume on platforms like Binance P2P as of late 2024.

While individuals may technically acquire cryptocurrencies through offshore platforms or P2P means, doing so is against the declared regulatory policy and without any legal protection within Kuwait. The prohibition on local businesses offering crypto services and on financial institutions facilitating such transactions effectively makes legitimate retail trading within Kuwait practically impossible.

Summary Points

Retail Cryptocurrency Trading Status in Kuwait: Regulatory Analysis (June 2025)

1. Overall Regulatory Status:

  • Banned: Retail cryptocurrency trading (buying, selling, and holding) by individual citizens and residents in Kuwait is effectively banned.

2. Key Regulatory Bodies and Roles:

  • Central Bank of Kuwait (CBK):
    • Issues circulars prohibiting financial institutions from facilitating cryptocurrency transactions.
    • Issues warnings about the risks associated with cryptocurrencies (volatility, illicit use).
    • Plays a key role in AML/CFT regulation.
  • Capital Markets Authority (CMA):
    • Instituted an "absolute prohibition" on key virtual asset operations in July 2023.
    • Prohibits local regulators from licensing businesses to provide services related to virtual assets.
  • Ministry of Commerce and Industry:
    • Part of the joint regulatory effort to ban virtual asset operations.
  • Insurance Regulatory Unit:
    • Part of the joint regulatory effort to ban virtual asset operations.
  • Ministry of Interior (MoI):
    • Declares crypto mining illegal and unlicensed, citing violations of laws and strain on the electricity grid.

3. Key Legislation and Regulations:

  • July 2023 Circulars (CBK, CMA, Ministry of Commerce and Industry, Insurance Regulatory Unit):
    • Instituted an "absolute prohibition" on using virtual assets as payment, investing in them, and offering related services.
    • Prohibited the issuance of licenses for virtual asset services.
    • Banned cryptocurrency mining.
  • Law No. 106 of 2013 (Anti-Money Laundering and Combating the Financing of Terrorism):
    • Provides a general framework for financial transactions.
    • Requires customer due diligence (CDD) and suspicious transaction reporting (STR) by financial institutions and designated non-financial businesses and professions (DNFBPs).
    • Defines "funds" broadly, potentially including assets in "electronic and digital form."

4. Requirements for Compliance:

  • Financial Institutions: Prohibited from facilitating cryptocurrency transactions.
  • Businesses: Prohibited from engaging with virtual assets as an investment vehicle or offering related services to customers.
  • Individuals: Effectively prohibited from legally participating in retail trading due to restrictions on payments and investments.
  • All Entities: Subject to AML/CFT regulations under Law No. 106 of 2013.

5. Notable Restrictions and Limitations:

  • Absolute Prohibition: Using virtual assets as a payment instrument/method.
  • Investment Ban: Dealing with virtual assets as a means of investment.
  • Licensing Ban: Issuance of licenses for virtual asset services is prohibited.
  • Mining Ban: All virtual asset and cryptocurrency mining activities are completely banned.
  • Limited Legal Protection: Individuals acquiring cryptocurrencies through offshore platforms or P2P means operate outside the legal framework.

6. Recent Developments and Changes:

  • July 2023: Comprehensive bans on most cryptocurrency-related activities implemented by multiple regulatory bodies.
  • April/May 2025: Crackdowns on illegal crypto mining operations, citing violations of laws and strain on the electricity grid.
  • Ongoing: Reports indicate some peer-to-peer (P2P) trading might still occur through unregulated channels, despite the ban.

Full Analysis Report

Report on the Current Status of Retail Cryptocurrency Trading in Kuwait

Date: 2025-06-26

Topic: Retail_Trading_Status

Description: Assess whether individual citizens and residents in the country are legally permitted to buy, sell, and hold cryptocurrencies. Detail the regulatory environment surrounding this activity (e.g., KYC/AML requirements imposed on platforms, general warnings issued).

1. Identified Current Status:

Banned

2. Detailed Narrative Explanation:

Retail cryptocurrency trading (buying, selling, and holding) by individual citizens and residents in Kuwait is effectively banned. This conclusion is based on a series of circulars and statements issued by Kuwaiti regulatory authorities, including the Central Bank of Kuwait (CBK) and the Capital Markets Authority (CMA). These directives prohibit financial institutions from facilitating cryptocurrency transactions and explicitly forbid the use of virtual assets as payment instruments or investment tools. While some earlier reports and analyses suggested a gray area or lack of specific legislation directly penalizing individual users, the comprehensive nature of the bans issued in July 2023 by multiple regulatory bodies, and reinforced by subsequent actions against crypto mining, points towards a clear prohibition of most crypto-related activities.

Historically, the CBK had issued warnings about the risks associated with cryptocurrencies, citing volatility and potential for illicit use. These warnings were part of broader financial awareness campaigns. However, the regulatory stance significantly hardened in July 2023. The CMA, along with other regulators like the CBK, the Ministry of Commerce and Industry, and the Insurance Regulatory Unit, issued circulars that instituted an "absolute prohibition" on key virtual asset operations. This ban explicitly covers using virtual assets as payment, investing in them, and offering any related services. Furthermore, the authorities are prohibited from issuing licenses for virtual asset services.

The stated rationale for these prohibitions centers on combating money laundering and terrorist financing, aligning with Financial Action Task Force (FATF) recommendations, although the FATF itself has not called for outright bans.

While the primary focus of the circulars appears to be on businesses and financial institutions, the prohibition on using cryptocurrencies for payments or investments effectively curtails the ability of individual citizens and residents to legally participate in retail trading. The ban also extends to cryptocurrency mining. Recent crackdowns on illegal crypto mining operations in April and May 2025, citing violations of laws related to industry, penal code, IT, and municipal regulations, as well as strain on the electricity grid, further underscore the government's prohibitive stance.

Despite these prohibitions, some reports indicate that peer-to-peer (P2P) trading might still occur through unregulated channels. However, this activity would be taking place outside the established legal and regulatory framework and contrary to the explicit directives of the authorities.

The country's Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) laws (primarily Law No. 106 of 2013 and its executive regulations) provide a general framework for financial transactions and require customer due diligence (CDD) and suspicious transaction reporting (STR) by financial institutions and designated non-financial businesses and professions (DNFBPs). While these laws define "funds" broadly to potentially include assets in "electronic and digital form," the specific circulars from 2023 directly address and ban virtual asset activities, taking precedence in this domain.

Therefore, while individuals might technically be able to acquire cryptocurrencies through offshore platforms or P2P means, doing so would be against the declared regulatory policy and without any legal protection or recognition within Kuwait. The prohibition on local businesses offering crypto services and on financial institutions facilitating such transactions makes legitimate retail trading within Kuwait practically impossible.

3. Specific, Relevant Text Excerpts:

  • July 2023, Capital Markets Authority (CMA) Circular (summarized in multiple sources): "Kuwait's Capital Markets Authority (CMA) announced a complete ban on most cryptocurrency-related activities, including payments, investments, and mining, according to a circular released on 18 July. This includes prohibiting local regulators from licensing businesses to provide services related to virtual assets." Another summary states the CMA reiterated its ban on crypto assets, stipulating an "absolute prohibition of using virtual assets as a payment instrument/method" and forbidding Kuwaiti businesses from engaging with virtual assets as an investment vehicle or "offering this type of service to any customers." Crypto asset mining is also "strictly prohibited."
  • July 2023, Joint Regulatory Circulars (summarized by the Library of Congress): "On July 17, 2023, the following regulatory authorities in Kuwait issued an “absolute prohibition” on dealing in virtual currencies, including: Circular issued by the Central Bank of Kuwait to all local banks, financing companies, and exchange companies. Circular No. (10) of 2023 issued by the Capital Markets Authority. Circular No. (6) of 2023 issued by Kuwait's Insurance Regulatory Unit." The prohibitions include: "Payment: Strictly prohibits using virtual assets as a payment method or recognizing them as a decentralized currency in the State of Kuwait. Investment: Prohibits dealing with virtual assets as a means of investment and bans offering related services to any customer. Licensing: Prohibits the issuance of licenses to individuals or entities for providing virtual asset services... Mining: Completely bans all virtual asset and crypto-currency mining activities."
  • May 2021, Central Bank of Kuwait (CBK) Statement: "The CBK therefore cautions against dealing in crypto-assets, such as Bitcoin, Ethereum, Dogecoin, etc." and "Dealing in crypto-assets offered by unidentified issuers and traded under fictitious names leaves wide room for illegal uses of funds, unauthorized transactions, and money laundering since the assets are not under the control of any central authority..." While this was a warning, it laid the groundwork for the later prohibitions.
  • April 2025, Ministry of Interior (MoI) Statement on Crypto Mining (summarized from various reports): "The Kuwait Ministry of Interior (MoI) has issued a statement saying that crypto mining in the country is illegal and unlicensed." The ministry clarified that "cryptocurrency mining violates several key laws" and "depletes electricity power and increases the load on the power networks which can result in power outages a threat to public safety." This reinforces the ban on a key crypto-related activity.
  • Crystal Intelligence Report (June 2025): "Kuwait has imposed a blanket ban on crypto services, payments, and investments as of late 2024." It also notes, "Despite regulatory constraints in several Gulf countries, crypto adoption continues to expand—often through informal or unregulated channels. One of the most striking examples is Kuwait, where, despite a national ban, peer-to-peer (P2P) trading exceeded KWD 3 million in daily volume on platforms like Binance P2P." This highlights the existence of unregulated activity despite the ban.

4. Direct, Accessible URL Links to Specific Sources:

Web Sources (21)

Sources discovered via web search grounding

Search queries used (6)
  • Kuwait cryptocurrency regulation status 2024 2025
  • Central Bank of Kuwait official statements on cryptocurrency
  • Kuwait Capital Markets Authority cryptocurrency rules
  • Kuwait AML KYC cryptocurrency regulations for individuals
  • retail crypto trading legality Kuwait 2024 2025
  • Kuwait Ministry of Finance cryptocurrency policy
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