Kuwait Takes Move to Effectively Ban Crypto
In a move that has come as some surprise to those in the cryptocurrency industry, Middle Eastern country Kuwait has implemented a ban on the use of digital currencies, effectively leaving the industry completely dead in the nation. It comes as more and more regulatory boards worldwide seek to become more involved with crypto. These regulators see the decentralized nature of such coins as concerning, given that there is little oversight.
This lack of oversight is seen to present consumers and investors with little protection or recourse should anything happen with their transactions or investments. Now, though, it looks like Kuwait has stolen a stride on its fellow concerned nations by restricting crypto use significantly.
This new regulation, according to Arabian Business, was part of a wider move in the country to tackle money laundering and the financing of terrorism. Their Financial Action Task Force (FATF) reportedly outlined restrictions on digital transactions as a strong way to reduce the risk of such illegal behavior. As it stands, any individuals in Kuwait will no longer be able to make payments for products or services using tokens such as bitcoin, Doge, or Ethereum. Further to that, there will no longer be legal avenues to invest using such tokens or coins. The government has explained that they have not licensed any crypto exchanges or associated trading platforms. It will also not issue any going forwards, meaning that there is no scope under the current approach for any trades. The regulations also mean that all mining activities in the country are prohibited, ultimately killing any potential for the industry to remain in some capacity, even crypto casinos.
Worldwide Trepidation Around Decentralized Currency
Blockchain and cryptocurrency more specifically have been revolutionizing the way business is conducted for a number of years now, particularly when it comes to the Internet of Things. However, this has presented governments across the globe with new hurdles. As is always the case in global politics, those in power are wary of anything that stands to shake the existing structure, especially financially. As such, a number of countries have tried to establish regulatory frameworks around crypto in order to maintain some element of oversight and control within the industry. Nations traditionally perceived as more repressive, like China, have implemented bans on tokens like bitcoin that make them illegal to use or trade. However, most jurisdictions have taken a more hands-off approach, allowing individuals to invest or trade as they see fit. The only stipulation is that the individual owns the risk of the volatility associated.
Europe, for example, is largely supportive when it comes to crypto. The European Union set regulations around the market earlier this year. However, this action was mostly focused on the oversight of trading platforms and exchanges. Individuals can still trade assets; however, the exchanges they use must be licensed. This was in an effort to provide protection to the user, rather than outright ban them from using any form of digital coin. With this, it’s clear to see that there is no one-size-fits-all approach to keeping the crypto-asset market inline. What works for the EU clearly is seen as too liberal for a country like Kuwait, which perhaps has more geopolitically specific concerns around the use of such tokens. Nevertheless, it’s clear that there is still work to be done to ease government fears worldwide.
A Dent in the Crypto Market?
It’s difficult to predict what such a ban will mean for the industry as a whole. However, as Politico reported in August of 2022, as a region, the Middle East was the fastest growing when it came to crypto use. Kuwait accounts for only around 1% of the population of the region, which means that it’s likely that this ban alone won’t upset the figures too greatly. The concern, though, is perhaps the knock-on effects that such regulation might have. If one nation takes a bold stance, will its neighbors look to it for guidance going forwards? It’s not uncommon for nearby nations to adopt similar legislation, given that there is often a shared interest in the matter. If this were to happen, it could stunt the growth in use that crypto has experienced in this market.
While a reduction in adoption in the Middle East would be disheartening, careful regulation and better promotion could be positive for the industry in the region. As it has been perhaps unfairly associated with illicit activities, any steps to curtail this would be seen as legitimizing the market. While Kuwait may have removed itself from that market completely, others may see this as a perfect time to establish a healthy relationship with crypto.