The Central Bank of Kuwait has cautioned that digital currencies are not genuine currencies, are extremely hazardous, and threaten the world financial system. The bank warned Kuwaiti people against investing in digital currencies in a recent statement, reminding them that these currencies are unregulated and might lose their money.
The CBK issued the warning as part of its Diraya campaign, which means “Be Aware.” To raise financial awareness in Kuwait, the apex bank has partnered with the Kuwait Banking Association and all Kuwaiti banks in this campaign.
Although the bank acknowledged the rise in popularity of digital assets, it cautioned that they could not be equated to actual money. According to the bank, “real currency” is issued by a monetary authority and serves as a symbol of sovereignty.
“The CBK, therefore, cautions against dealing in crypto-assets, such as Bitcoin, Ethereum, Dogecoin, etc. Such dealings come at high risk and with an array of negative consequences for dealers in view of the nature of these assets and the high fluctuation in their prices.”
Digital currencies, like many other banking regulators, are seen as a threat to the global financial system by the CBK. This is because transactions can be carried out through illegal/fake wallets or organizations, which could lead and steer people’s money outside of the protections of official trade processes and norms.
According to CBK, digital currencies provide anonymity, allowing criminals to engage in money laundering and other illicit transactions. The central bank said that digital currency platforms are difficult to monitor and vulnerable to cyber-attacks, citing the Bank for International Settlements.
The regulator has been collaborating with local banks to ensure that customers are informed of the hazards involved with digital currency. It has also collaborated with organizations outside of the banking industry to raise public awareness.
While Kuwait advises caution, other Middle Eastern countries have embraced digital currencies wholeheartedly. The United Arab Emirates has been a pioneer in adoption. The Dubai Multi Commodities Centre (DMCC) announced the opening of the DMCC Crypto Centre on Monday. This ecosystem aims to foster the growth of enterprises involved in the digital currency and blockchain industries.