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Kuwait Central Bank issues warning regarding Bitcoin, Ethereum, DogeCoin, and other crypto investments

By on May 25, 2021 0

the Central Bank of Kuwait issued a statement on crypto assets and their risks.

KuwaitThe company’s reserve bank says it aims to increase financial awareness and intends to encourage the Kuwaiti banking sector to adopt socially responsible business practices. The Central Bank of Kuwait shared information on the high risks involved in conducting transactions with crypto-assets.

This announcement, published on Saturday May 22, 2021, is part of the bank’s supervised “Diraya” campaign (Be aware in Arabic) ”, which would be managed by the Kuwait Banking Association (KBA) with the participation of all local banking institutions.

As Noted in the announcement, there was a significant increase in the “promotion and calls to invest and trade in crypto-assets, sometimes referred to as crypto ‘currencies.” The CBK “recalls that these assets can in no way be compared to real money”.

The central bank statement also mentioned that “real” currency is “issued by a legal state as currency and as a symbol of sovereignty, is regulated by public authorities such as central banks or monetary institutions, is considered and accepted as a reserve of value and legal tender, and serves as a reliable medium of exchange. “

The Kuwaiti central bank further noted that states are striving to protect their “real” currencies and to put in place policies that “ensure relative stability of the exchange rate against major world currencies”.

The bank added:

“The CBK therefore warns against transactions in crypto-assets, such as Bitcoin, Ethereum, Dogecoin, etc. in their prices. These assets are not subject to any regulation or supervision by any authority in the State of Kuwait, which could lead to heavy losses for speculators and increased risk of fraud. Therefore, trading in cryptoassets is a high risk, especially for individuals. “

The Kuwaiti Reserve Bank also mentioned:

“International institutions, such as the Bank for International Settlements (BIS) and several central banks, have all pointed out the risks involved in such exchanges given the insane fluctuation in the value of these assets over a short period and in difficulty. to supervise them and follow the relevant developments and provide any kind of security for the systems / devices used by traders and speculators, in addition to the absence of an institution or body capable of controlling or regulating this market. “

The reserve bank further noted that these types of assets pose a significant threat to the global financial system and “to people’s fortunes, especially since transactions can be carried out through wallets or organizations. illegal / bogus, which could lead and direct individuals’ funds beyond. the guarantees of official trade protocols / guidelines. “

The bank warned:

“Trading in crypto-assets offered by unidentified issuers and traded under fictitious names leaves a lot of room for illegal uses of funds, unauthorized transactions and money laundering, as the assets are not under the control of no central authority, in addition to the digital threat. violations and attacks. This, in addition to the high energy consumption of mining operations, adds an environmental aspect to the threat. “

The Central Bank of Kuwait had in recent years asked the country’s banks to take appropriate measures to make their customers aware of the various risks associated with the processing of cryptocurrencies. The central bank confirmed that it had informed the relevant authorities of the problems associated with the use of cryptos and had also “urged them to contribute by taking the necessary measures and measures, and sought to coordinate with the relevant agencies to raise public awareness of the high risks involved ”.

The reserve bank also noted:

“Fintech innovations have improved access and convenience to financial services and transactions, but come with risks they should be aware of. This vigilance is all the more crucial as social networks, and unregulated channels alike, are used to advertise and market high-risk transactions. “