Dubai: The Central Bank of Kuwait has warned citizens against trading in cryptocurrencies amid growing investor concerns.
The CBK warning follows recent crazy swings in the valuations of major global crypto currencies such as Bitcoin, Ethereum, Dogecoin. It has been reported that Kuwaiti investors have suffered heavy losses on their crypto investments in recent weeks.
Digital currencies are not real currencies, are very risky and pose a threat to the global financial system, the Central Bank of Kuwait warned in a recent statement, reminding people that these currencies are unregulated and pose a threat to the global financial system. ‘huge risks.
The CBK warning was part of its Diraya campaign, which translates to “Be aware. The central bank has joined this campaign with the Kuwait Banking Association and all Kuwaiti banks to raise awareness of finance in the country.
Not a “currency”
Amid the noticeable increase in promotion and calls to invest and trade in crypto assets, sometimes referred to as ‘crypto currencies’, CBK reiterates that these assets can in no way be compared to real currency. .
Warning of the investor frenzy around digital assets, the CBK warned that these assets can in no way be compared to real money.
“Real money is issued by a legitimate state as a currency and symbol of sovereignty, is regulated by state authorities such as central banks or monetary institutions, is considered and accepted as a store of value and a currency legal, and serves as a reliable means of exchange. In addition, States strive to protect their real currency and apply policies guaranteeing relative stability of the exchange rate against the main world currencies ”,
The CBK has warned against transactions of crypto assets, such as Bitcoin, Ethereum, Dogecoin, etc. in their prices, ”the central bank said.
The CBK warning comes at a time when the cryptocurrency market suffered its worst crash in more than 12 months, with major cryptocurrencies slipping over 25%, signaling high risk for investors.
Like most banking regulators, the CBK believes that digital currencies pose a threat to the global financial system. Indeed, “transactions can be carried out through illegal / bogus wallets or organizations, which could lead and direct individuals’ funds beyond the guarantees of official trade protocols / guidelines.”
Digital currencies allow anonymity, giving criminals the opportunity to engage in money laundering and other unauthorized transactions, according to CBK. Quoting the Bank for International Settlements, the central bank added that digital currency platforms are also difficult to oversee and are prone to cyber attacks.
Last week, China banned financial institutions and payment companies from providing services related to cryptocurrency transactions. This means that banks and online payment channels should not offer customers any services that involve cryptocurrencies, such as registration, trading, clearing, and settlement.
Concerned about the volatility and risks associated with cryptocurrencies, many central banks around the world are considering the possibility of issuing their digital currencies.
The US Federal Reserve will soon release a paper that will focus on the benefits and risks of a CBDC, soliciting public comment on whether it should go ahead with the plan and flagging the risks, etc. . Powell said in the video that this “represents the start of a thoughtful and deliberative process” when it comes to thinking about central bank digital currency (CBDC).
In India, the government has launched the Cryptocurrency and Official Digital Currency Regulation Bill, 2021, which will ban all private cryptocurrencies and establish the regulatory framework for the launch of an “official digital currency. “. It was to be introduced in Parliament’s budget. earlier this year, but was put on hold as the government continues discussions with stakeholders.