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A cryptocurrency by definition is a virtual currency that is not issued by any central authority or governmental entity. The idea and effects of money have changed now that it is no longer tangible - it is faster to circulate, it is continuous with no fixed units (no KD 1 or KD 20 bills any longer), it is more accessible and it is private! These effects are making it challenging to work with legally. I can say this from experience as I am currently in Hong Kong advising on cryptocurrency legislations and bylaws.
For example, different countries are looking at bitcoin differently (the most popular cryptocurrency). EU has defined bitcoin as a currency, while the US also defines bitcoin as a currency - the IRS taxes it as property. But China has banned banks from dealing with it. So where does Kuwait or the GCC stand? I have been receiving many questions on the legality of cryptocurrencies, which I have put together and answered below.
Legality
Fajer: As of today, the Kuwaiti regulator and other entities such as the Central Bank have been silent about cryptocurrencies, tokens and other blockchain innovations. As a general rule of law, if the law refrains from prohibiting an action, then that action is legal. This might be confusing to some because we are used to the idea of giving our money to a third party (a bank) to manage, or the idea that money has to be governed by a state. But this is a new era! We can now be responsible for our money.
This means that if you decide to purchase, you have to do your research. Unlike banks, if you transfer to, let's say the wrong wallet, there is no undo button! I know there are companies in Kuwait that claim to invest for you. Again, they are not illegal, but look into them first as there have been many scams. Make sure you know who you are asking to trade for you, whether a person or company.
There are not many places in Kuwait where you can buy cryptocurrencies, but one tech startup you should keep an eye out for is YallaBit. The CEO and co-founder Talal Alyaseen (who also co-founded Ajar Online) had the idea of making cryptocurrencies accessible for everyone to buy and sell easily. Although YallaBit has AML policies (anti-money laundering) and KYC policies (Know Your Customer) in place, you can easily purchase the currencies by just providing an ID, and unlike other providers, you can receive your cryptocurrency the same day.
Check them out on www.yallabit.com or [email protected]. They are currently in their soft launch phase and will officially launch in two weeks, but are accepting orders through live chat. I am so proud to see startups like YallaBit in the region. We have many talented and innovative entrepreneurs in Kuwait who have been inspiring, and YallaBit is one of them!
Protection
Question: Does the government have any "protective" measures in place should you decide to "invest" in bitcoins?
Fajer: As I mentioned above, Kuwait has been silent about the matter. But I sometimes wonder why investors hoping to invest in a cryptocurrency that is completely unregulated and decentralized want it to be regulated locally? This is not the idea or the philosophy that the bitcoin was created on, but just like all great innovations, it changes with time and the needs of the people.
Question: Can the Kuwaiti government, just like other governments we have seen, ban cryptocurrencies?
Fajer: No country can take away a cryptocurrency from you - they can ban you from accessing certain websites or they can prohibit it legally, but they cannot take it away from you unless you personally hand it over to the government. Cryptocurrencies might be traceable, but they are completely anonymous, as your ownership through a wallet is not connected to your name. Therefore, technically no government can ban peer-to-peer transactions either!
Should you have any questions or concerns, or you require a consultation, please email me at [email protected].
By Attorney Fajer Ahmed
