Kuwait's Central Bank Crypto Ban: Full Details & Impact

When the Central Bank of Kuwait issued a July2023 circular outlawing every crypto‑related activity, the Gulf region got its most restrictive stance on digital assets. The ban covers payments, investments, licensing and even mining, turning Kuwait into a regulatory outlier among its neighbours. This article unpacks what the prohibition actually means, how authorities enforce it, the economic ripple effects and where Kuwait sits in the wider GCC landscape.

Key Takeaways

• The Central Bank of Kuwait, together with four other agencies, declared an Kuwait crypto ban that forbids all cryptocurrency transactions, services and mining within the country.
• Enforcement intensified in 2025, with over 1,000 illegal mining sites shut down and hefty penalties issued.
• Despite being one of the world’s cheapest places for Bitcoin mining, Kuwait’s energy‑intensive operations are deemed a threat to its power grid.
• Regional peers such as the UAE and Saudi Arabia are piloting CBDCs, while Qatar is easing its restrictions - Kuwait remains firm.
• Future policy signals point toward sovereign digital currency experiments, but private crypto stays banned.

1. How the Ban Was Built - A Multi‑Agency Playbook

The prohibition didn’t come from a single decree. Four bodies released coordinated circulars on 17July2023:

1. Central Bank of Kuwait sent a directive to all banks, financing firms and exchange companies prohibiting crypto dealings.
2. Capital Markets Authority published Circular No.10/2023 extending the ban to securities‑related activities.
3. The Insurance Regulatory Unit issued Circular No.6/2023 to block crypto products in insurance portfolios.
4. Ministerial Circular No.1/2023 from the Ministry of Commerce and Industry and the State Minister for Youth Affairs reinforced consumer warnings.

All four circulars cite the FATF’s Recommendation15 on AML/CFT, positioning the ban as a compliance safeguard rather than a purely ideological move.

2. What the Prohibition Actually Covers

The ban is absolute - any interaction with virtual assets is illegal. The four pillars are:

• Payments: No crypto can be used for e‑payments, bill settlement or as a recognized currency.
• Investments: Banks and licensed firms may not offer crypto‑related investment products, advisory services or brokerage.
• Licensing: No new or existing licence for virtual‑asset service providers (VASPs) will be granted; none have been issued to date.
• Mining: All forms of cryptocurrency mining are prohibited, and any existing operations must cease immediately.

The Ministry of Finance also refuses to recognize cryptocurrencies for any official commercial transaction, creating a uniform government front.

3. Enforcement on the Ground - Mining Crackdowns and Power Grid Protection

In April2025 the Ministry of Interior issued a statement confirming the illegality of crypto mining and announced a nationwide sweep. The General Department of Security Relations and Media listed several statutes violated by miners, including:

• Law No.56/1996 (Industry Law)
• Law No.31/1970 (Penal Code amendment)
• Law No.37/2014 (Communications and Information Technology Regulatory Authority - CITRA oversees telecom and internet services)
• Law No.33/2016 (Municipality Law)

Authorities discovered more than 1,000 hidden mining farms, many disguised as small‑scale data centers. The Ministry of Electricity, Water and Renewable Energy reported that illegal mining was draining subsidised electricity and threatening grid stability. Estimates suggest that Bitcoin mining alone would consume about 140,336GWh per year - enough to outpace the entire electricity usage of countries like Ukraine.

4. Economic Angle - Why a Cheap‑Power Nation Is Still Banning Crypto

Kuwait’s electricity subsidies have historically made it one of the world’s most affordable places to mine Bitcoin. A 2022 study showed mining costs as low as $1,400 per BTC, compared with $18,000 in Texas at the time. However, the same affordability translates into massive energy draw. The government argues that uncontrolled mining jeopardises public utilities, inflates national power bills and could trigger blackouts.

Beyond energy, officials see a broader risk: allowing private crypto ecosystems might erode confidence in the Kuwaiti dinar and complicate monetary policy. By sealing off the private crypto market, the state preserves its traditional banking system and keeps a tight grip on capital flows.

5. Kuwait vs. Its GCC Neighbours - A Comparative Snapshot

The table shows that Kuwait’s stance is the most prohibitive, even when compared to Qatar’s early‑stage regulatory framework.

6. Looking Ahead - CBDCs, Sukuk Law and Traditional Finance

While private crypto stays banned, the Central Bank of Kuwait is not ignoring digital innovation altogether. Ongoing feasibility studies explore a sovereign CBDC that could coexist with the current ban. Meanwhile, the recent Sukuk Law offers clearer rules for Islamic finance instruments positions Kuwait as a regional hub for Sharia‑compliant capital markets.

In 2024 the government passed the Financing & Liquidity Law authorising up to KWD30billion in public debt issuance. Both moves underscore a preference for state‑backed, traditional financial tools over private digital assets.

Unless there is a major shift in regional policy or a demonstrable reduction in the energy impact of mining, the absolute prohibition is expected to stay in place for the foreseeable future.

Frequently Asked Questions

Is owning Bitcoin legal for individuals in Kuwait?

No. The 2023 circular from the Central Bank of Kuwait classifies any holding, transfer or use of Bitcoin as a prohibited activity, applicable to both residents and citizens.

Can a Kuwaiti bank offer crypto‑related investment products?

Absolutely not. The ban explicitly bars banks and other licensed financial institutions from providing any crypto‑investment or advisory services.

What penalties do miners face if caught?

Violators can be prosecuted under multiple statutes, including the Penal Code and the Industry Law. Penalties range from hefty fines to imprisonment, and equipment is seized by the Ministry of Interior.

How does Kuwait’s crypto ban compare to the UAE’s approach?

The UAE adopts a licensing model that allows crypto exchanges in free zones, whereas Kuwait blocks every crypto activity outright, making its regime the most restrictive in the Gulf.

Will the ban affect foreign investors looking to set up crypto businesses in Kuwait?

Yes. No licence for virtual‑asset service providers is issued, meaning foreign crypto firms cannot legally operate in the country.