Custodial wallet / SaaS in Kuwait
Hosted wallet provider that holds keys on behalf of end users, often white-labeled to businesses (custody as a service).
Custodial SaaS is not permitted in Kuwait.
Verdict Details
- Permitted
- no
- Local entity required
- Yes
- Licensing burden
- High
- Last updated
- 2026-07-13
AML Obligations
- Law No. 106 of 2013 (as amended by Law No. 37 of 2020) and its Executive Regulations apply — requiring customer due diligence, transaction monitoring, suspicious transaction reporting, and record-keeping in line with FATF standards.
- The prohibition means that even a compliant AML/KYC program cannot be operated for custodial wallet/SaaS services by any regulated financial institution or VASP in Kuwait.
Key Restrictions
- A blanket prohibition on all virtual asset activities applies across all regulated financial sectors — banks, investment companies, insurance firms, and capital markets entities supervised by CBK, CMA, and the Insurance Regulatory Unit.
- The CMA's circular explicitly prohibits public companies from offering crypto services, and the CBK circular prohibits dealing in or providing any services related to virtual assets.
- Even if a custodial wallet/SaaS provider could hypothetically structure as a non-regulated entity, the prohibition extends to the entire financial ecosystem (banks cannot bank them, companies cannot use them).
- No licensing framework exists for VASPs — the regulations explicitly do not provide a legal framework for licensing, supervision, or operation of VASPs.
Key Risks
- Regulatory enforcement risk is acute — regulators (CBK, CMA, MOCI) acted in concert for a total ban and would impose sanctions including license revocation and fines on any entity engaging in crypto activities.
- No legal pathway for VASPs means any attempt to operate would be operating outside the law with no grandfathering or transition provisions.
- Ministry of Electricity enforcement (monitoring grids for crypto mining) signals that cross-sector enforcement cooperation exists.
Evidence
This verdict synthesizes the following facts. Each fact links to its primary source(s).
Central Bank of Kuwait (CBK): Prohibits the banking sector and regulated companies from trading in cryptocurrencies, facilitating related transactions, and accepting crypto for e-payments. The CBK also leads public awareness campaigns warning consumers about crypto risks.
Capital Markets Authority (CMA): Enforces the absolute prohibition on virtual currencies, ensures public companies do not offer crypto services, and issued the primary ban circular in July 2023.
Kuwait's Insurance Regulatory Unit: Issued a circular contributing to the nationwide prohibition and ensures insurance sector entities comply.
Prohibit financial institutions under their supervision from dealing in cryptocurrencies or virtual assets, or providing services related to them.
Do not provide a legal framework for the licensing, supervision, or operation of VASPs.
This circular explicitly prohibits local banks and financial institutions licensed by the CBK from dealing in, or providing any services related to, virtual assets. It cites risks like market manipulation, financial crime, operational risk, cyber security risk, and price volatility.
The CMA has also issued warnings consistent with the CBK's stance, cautioning against investing in and trading virtual assets due to their unregulated nature and associated risks.
Entity Targeted: All regulated financial institutions, including banks, investment companies, financial services firms, and virtual asset service providers (VASPs) licensed in Kuwait. This effectively targets the activity itself within the regulated sector. Violation Type: Engaging in any virtual asset activities, including:.
Issuance, trading, or dealing in cryptocurrencies.
Using cryptocurrencies as a payment method.
Licensing of virtual asset service providers (VASPs).
Outcome: All financial institutions supervised by the CMA, CBK, and MOCI are prohibited from providing virtual asset services or engaging in crypto-related activities. The ban was issued in the context of money laundering, terrorist financing risks, and consumer protection concerns, aligning with the recommendations of international bodies like the Financial Action Task Force (FATF).
Law No. 106 of 2013 regarding Anti-Money Laundering and Combating the Financing of Terrorism.
Law No. 37 of 2020 amending Law No. 106 of 2013.
Verdict Attribution
- Source:
- AI-Generated · Unreviewed
- AI synthesized:
- 2026-07-13 (deepseek-chat)
- Last updated:
- 2026-07-13
- Confidence:
- high
This verdict was produced by an AI model from the underlying facts. Confirm with counsel before relying on it for material decisions.
Not permitted — Kuwait has imposed an absolute, multi-regulator ban on virtual asset activities (including custodial wallet / SaaS) for all entities under CBK, CMA, and insurance sector supervision, with no VASP licensing framework available.
Questions this verdict aims to answer
- What custody license / qualified-custodian status applies?
- What segregation, insurance, and proof-of-reserves rules apply?
- What AML obligations attach to the SaaS vs the white-label client?