Central Bank of Kuwait Crypto Prohibition: Complete Ban on Digital Assets Explained

• DATE: 18 01 26
• BY: Stellan Marwick

Kuwait doesn’t just discourage cryptocurrency-it bans it completely. Since July 2023, the Central Bank of Kuwait has enforced one of the strictest crypto prohibitions in the world. No trading. No mining. No payments. No investments. Not even a loophole. If you’re using Bitcoin, Ethereum, or any other digital asset in Kuwait, you’re breaking the law.

What Exactly Is Banned?

The ban isn’t vague. It’s detailed. It covers every possible way you might interact with cryptocurrency. The Central Bank of Kuwait issued a directive to all banks, financing companies, and exchange firms: stop all crypto-related activity. That means no accepting Bitcoin as payment, no converting USD to Ethereum, no offering crypto wallets, and no facilitating trades between customers.

It doesn’t stop there. The Capital Markets Authority, the Insurance Regulatory Unit, and the Ministry of Commerce and Industry all jumped in with their own circulars. Together, they shut down four key areas:

• Payments: You can’t pay for goods or services with Bitcoin or any other digital asset. No merchant in Kuwait is allowed to accept it.
• Investments: No one can sell you crypto as an investment. No trading platforms, no brokers, no crypto ETFs-none of it.
• Licensing: No business, foreign or local, can get a license to offer crypto services. And no such license has ever been issued.
• Mining: Running a Bitcoin miner in your garage, basement, or warehouse? Illegal. Period.

Why Does Kuwait Care So Much?

Kuwait isn’t just being cautious-it’s reacting to real risks. The Central Bank of Kuwait says crypto threatens financial stability, enables money laundering, and undermines its banking system. But there’s another reason, one that’s more physical: electricity.

In 2022, Kuwait had the cheapest electricity in the world for Bitcoin mining. At just $1,400 per BTC, it was cheaper than mining in Texas, Germany, or Canada. With government-subsidized power, crypto miners flocked to the country. By April 2025, authorities had identified over 1,000 illegal mining operations. These aren’t small rigs. They’re industrial-scale setups, often running 24/7 in warehouses and residential buildings.

The result? Massive power drain. The Ministry of Electricity, Water, and Renewable Energy reported that Bitcoin mining alone consumes 140,336 GWh per year-more than Ukraine or Malaysia. That’s enough to power hundreds of thousands of homes. When miners overload the grid, it causes blackouts. Schools, hospitals, and homes lose power. That’s not just inconvenient-it’s dangerous.

What Laws Are Being Broken?

The ban isn’t just a policy-it’s backed by criminal law. The Ministry of Interior made it clear: crypto mining violates multiple existing laws, including:

• Law No. (56) of 1996 (Industry Law) - unauthorized industrial activity
• Law No. (31) of 1970 (Penal Code) - illegal use of public resources
• Law No. (37) of 2014 (CITRA) - unauthorized telecommunications use
• Law No. (33) of 2016 (Kuwait Municipality) - illegal use of residential or commercial property

If you’re caught mining, you’re not just violating a banking rule. You’re breaking the law. Authorities can seize equipment, fine you, and even press criminal charges. The message is clear: this isn’t a warning. It’s a crackdown.

How Does Kuwait Compare to Other Gulf Countries?

While Kuwait shuts the door, its neighbors are opening windows. The UAE and Bahrain have full crypto licensing systems. Saudi Arabia allows regulated exchanges. Oman is testing a central bank digital currency. Even Qatar, once as strict as Kuwait, is preparing to allow digital assets in its financial free zone by mid-2025.

Kuwait stands alone. It doesn’t want to regulate crypto-it wants to eliminate it. The Central Bank of Kuwait has made it clear: digital assets are incompatible with its financial system. They don’t see blockchain as innovation. They see it as a threat to control, stability, and public safety.

What About Central Bank Digital Currency (CBDC)?

You might wonder: if they hate crypto, why not create their own digital currency? That’s exactly what Kuwait is considering. While private cryptocurrencies are banned, the Central Bank of Kuwait is studying a sovereign digital dinar. A CBDC would let the government control digital money without losing oversight. It would be traceable, secure, and backed by the state.

This isn’t just theoretical. Kuwait has already passed the Sukuk Law to strengthen Islamic finance and authorized up to KWD30 billion ($97 billion) in sovereign debt. These moves show they’re not against financial innovation-they just want it under their control.

What Happens If You Ignore the Ban?

If you’re a resident or business in Kuwait and you’re still mining, trading, or accepting crypto, you’re playing with fire. The government isn’t just watching-it’s acting. Enforcement is coordinated across multiple agencies:

• Ministry of Interior: Investigates and prosecutes violations
• Ministry of Electricity: Detects abnormal power usage patterns
• CITRA: Monitors network traffic for mining activity
• Kuwait Municipality: Inspects buildings for illegal setups

Equipment can be seized. Fines can reach tens of thousands of dinars. In extreme cases, individuals face criminal prosecution. There are no warnings. No grace periods. If you’re doing it, you’re already in violation.

What’s the Future for Crypto in Kuwait?

Don’t expect the ban to loosen. Kuwait has doubled down since 2023. The government hasn’t signaled any shift. With power shortages still a concern and public trust in traditional banking high, there’s no political incentive to change course.

For now, Kuwait remains the most restrictive country in the Gulf. While others experiment with crypto, Kuwait is building walls. And unlike places that ban crypto but still allow offshore trading, Kuwait makes it illegal even to hold digital assets within its borders.

If you’re in Kuwait, your best move is to avoid crypto entirely. Not because it’s risky-it’s because it’s against the law. And in Kuwait, breaking the law doesn’t just cost money. It can cost you freedom.

What’s Next for Kuwait’s Financial System?

Kuwait isn’t rejecting technology-it’s choosing its own path. The government is investing in digital infrastructure, but only where it can control the outcome. The upcoming CBDC could become the country’s main digital currency. The Sukuk Law is opening doors for Islamic finance innovation. The sovereign debt program is strengthening fiscal stability.

All of this suggests Kuwait’s goal isn’t to fall behind. It’s to stay in control. And that means keeping private cryptocurrencies out-no matter how cheap the electricity or how high the price of Bitcoin rises.