Stablecoin issuer / redeemer in Kuwait

Issuing, trading, or facilitating the trading of virtual assets.

Using virtual assets for payments or investment.

Licensing entities to operate as virtual asset service providers (VASPs).

Central Bank of Kuwait (CBK) Circular No. 2/252/2022 (July 2022): This circular mandates that entities supervised by the CBK refrain from dealing with virtual assets. While direct links to the official Arabic circular on the CBK website may be challenging to pinpoint, its contents have been widely reported and analyzed by legal firms and financial news outlets.

Capital Markets Authority (CMA) Resolution No. 129 of 2022 (July 2022): This resolution extends similar prohibitions to entities licensed by the CMA.

Status: Stablecoins are categorized under the general umbrella of "virtual assets" which are subject to the comprehensive prohibition.

Classification: There is no established regulatory classification (e.g., e-money, payment token, security) within a framework that permits their operation. They are simply prohibited digital assets. The regulators have treated them similarly to other cryptocurrencies for the purpose of the ban, recognizing them as digital representations of value that pose risks to financial stability, consumer protection, and anti-money laundering (AML)/counter-terrorist financing (CTF) efforts.

Not Applicable: Since the issuance and trading of stablecoins are prohibited, there are no specific reserve requirements in place. A framework for reserves would only be relevant if stablecoins were permitted to operate.

Prohibited: The current regulations explicitly prohibit the licensing of any entity to operate as a virtual asset service provider (VASP) or to issue stablecoins within Kuwait.

Not Applicable: With stablecoins being prohibited, there are no regulated redemption rights for users, as the financial system is not set up to facilitate their issuance or exchange.

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 Capital Markets Authority (CMA) has taken a strong stance against virtual assets. In 2023, the CMA issued Circular No. 12 of 2023, which effectively prohibits licensed entities (such as financial institutions, investment companies, and other CMA-supervised entities) from:

Directly or indirectly engaging in virtual asset activities.

Licensing, recognizing, or authorizing any virtual asset service provider (VASP).

Using virtual assets as a payment method or for investment.