Cryptocurrency operations carry a high level of risk and have a range of negative consequences for traders. This is stated in a statement by the Central Bank of Kuwait (CBK).
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The regulator pointed to the volatility of digital assets and the fact that they do not fall under the supervision of public authorities. In its view, this increases the risks of losing money and of fraud.
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“They [cryptocurrencies] pose a threat to the global financial system and to people’s welfare. … Transactions with crypto-assets offered by unestablished issuers leave wide room for illicit use of funds,” added the CBK.
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According to the press release, despite the name, cryptocurrencies are not real money. The central bank emphasised that the legal right to issue real currency lies with the state.
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“Real currency is regulated by state authorities. It is accepted as a store of value and legal tender, and also serves as a reliable medium of exchange,” the statement said.
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In conclusion, the CBK noted the high electricity consumption by miners, which “adds an environmental aspect to the threat”.
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Earlier, the Bank of Canada also warned users about the high risks investments in Bitcoin and Ethereum. The regulator described them as assets with an “indeterminate” intrinsic value.
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Earlier, Bank of England Governor Andrew Bailey warned that the prefix “crypto” and the word “currency” are incompatible. He said that investing in digital assets requires investors to be prepared to lose all their money.