Kuwait Implements Ban on Virtual Currency Transactions

This news has been read 33569 times!

CBK SETS 46 TRANSACTIONS THAT NEED PRIOR APPROVAL

KUWAIT CITY, July 19: The supervisory authorities — the Central Bank of Kuwait, the Capital Markets Authority, the Ministry of Commerce and Industry, and the Insurance Regulatory Unit — have issued circulars on supervision on the issue of virtual assets as a tool/means of payment or recognizing them as a decentralized currency in Kuwait, in addition to abstaining from conducting transactions whereby virtual currency is used as a payment instrument/method within the scope of this prohibition, reports Al- Jarida daily. The circulars, which were issued in accordance with the conclusions of the study prepared by the National Committee for Combating Money Laundering and Financing of Terrorism, regarding the required commitment in the field of implementing Recommendation No 15 of the international requirements issued by the Financial Action Task Force (FATF), forbids dealing with these assets as a means of investment.

Refrain
The circulars say it is necessary to refrain from providing this type of services to any of the customers, or to issue or grant any natural or legal person inside Kuwait a license to provide virtual asset services as a business for his benefit, or on behalf of others, noting that no licenses have previously been issued in this regard. The circulars also ban all virtual currency/asset mining activities.

Meanwhile, the informed sources told the daily that virtual assets are a form of currency trading, and it is a digital currency, as it is the closest analogy to the financial situation that exists in virtual assets. The sources emphasized that customers are constantly aware of the risks that may result from dealing in virtual assets, which are carried out through transactions carried out outside the State of Kuwait by customers, especially encrypted currencies, because they do not have a legal status and are not issued or supported by any government. It is not linked to any asset or issuer, and the prices of these assets are always driven by speculation that exposes them to a sharp decline.

Risky
The sources indicated that the local regulatory authorities have warned and carried out awareness campaigns to reduce the risks of dealing or investing in virtual assets or so-called virtual currencies, the most famous of which are “Bitcoin, Ethereum, Dogecoin and others” in light of the continued increase in calls to invest in and deal with these virtual assets which are highly risky and have various negative consequences for dealers, due to their nature and sharp fluctuation in their prices, in addition to not being subject to any supervisory or regulatory authority in the State of Kuwait.

Meanwhile, the Central Bank of Kuwait has specified 46 transactions and procedures related to companies, banks and entities subject to its supervision, whose transactions may not be completed at the Ministry of Commerce and Industry without referring to it and obtaining its approval prior to its execution, reports Al- Qabas daily.

A letter from the Central Bank of Kuwait to the Ministry of Commerce and Industry included two tranches of transactions that the ministry must refer to before completing them – the transactions of joint-stock companies, both public and closed, and the transactions of companies of persons with activities that are subject to its supervision. The transactions of the joint-stock companies included 21 transactions that are required to be referred to the Central Bank in the event that they are submitted by one of the entities subject to its supervision. The most important of them are the transactions for incorporating a public or closed Kuwaiti shareholding company, converting the legal entity from a partnership to a closed Kuwaiti shareholding company, increasing the capital through bonus shares, and decreasing the capital.

They also include the transactions for dividing the company into more than one joint stock company, merging between two companies of the same legal form or from another form, and converting a legal entity from a joint stock company to a limited liability company or a one-person company (companies of persons). Regarding partnership companies, it included 25 transactions and procedures, the most important of which are revoking the company’s license, transforming the legal entity of the company, issuing a Gulf branch, converting the legal entity from a joint-stock company to a partnership, changing the address (online), changing the name or commercial address, deletion or change of activity, increasing or decreasing of the company’s capital, redistribution of shares, entry or exit of the minor, natural or legal partner, and amending the management clause, including the removal or appointment of a manager.

In a related matter, the Central Bank of Kuwait addressed the Ministry of Commerce and Industry regarding Kuwait’s implementation of the agreement to harmonize the names and activities of companies in accordance with the international code of the United Nations’ classification of economic activities. It highlighted eight international activities for the entities subject to supervision and the extent to which they can be added to any other activities, as well as the legal entity for them. The bank stressed that it is not permissible to add the activity of practicing the business of conventional, Islamic or industrial banks to any commercial license except for joint stock companies.

As for the activity of financing services, it can be added to the activity of a company that has other activities, provided that the company is a joint stock company. The Central Bank asked the Ministry of Commerce and Industry not to add the activity of “electronic payment and settlement or banking systems business” to any other activity, and with the obligation that the license of the company that chooses to practice the business of the two activities be in accordance with the joint-stock companies or limited liability companies.

According to informed sources from the Ministry of Commerce and Industry, all companies and commercial establishments that operate under the umbrella of Law No. 111/2013 for regulating the licensing of commercial stores must work to reconcile the conditions of their activities, if required, by amending, deleting or changing, and specifying their designations in licensing activities or establishment contract.

These should be in line with the international economic activities, the international code, and in accordance with the system of matching or harmonization of activities and their equivalent in the unified guide for the classification of economic activities in the Gulf Cooperation Council. The sources affirmed that reconciling the companies’ conditions has become mandatory due to the signing of international agreements by the State of Kuwait, as well as at the level of the Gulf Cooperation Council in this regard.

This news has been read 33569 times!

Related Articles

Back to top button

Advt Blocker Detected

Kindly disable the Ad blocker

Verified by MonsterInsights