By Shelly Melancon (Switzerland)
Kuwait’s central bank says that state-issued currency is the only ‘real’ currency. Banks have issued a general warning to the populace about the consequences of investing in digital currencies following the horrendous events of the past week in the crypto space.
CBK: Crypto Investing Is Highly Volatile
Kuwait’s central bank (CBK) also lends its voice to those of other banks issuing a press release informing the populace that investing in virtual currency markets is a high-risk and volatile investment. The CBK further said that crypto assets might be called cryptocurrencies; they aren’t real currencies. It also opined that a currency is a sign of sovereignty, and only a real currency legally issued by a state can serve such a purpose.
“Only monetary institutions, like central banks, are authorized by the state to issue a real currency. Therefore, only such currencies can be counted as and recognized as a legal tender or store of value. It is the only authentic mode of exchange.”
CBK Gives Reasons Why Cryptocurrency Investment Is Risky
DOGE, BITCOIN, and ETHER were the notable digital currencies mentioned in the press release, probably because they were the top three cryptocurrencies based on market cap. Therefore, it is unsurprising that DOGE was included. It has enjoyed a fast rise in the crypto space due to Elon Musk’s social media influence on the meme-inspired coin. Unfortunately, the dogecoin price has nosedived ever since the tesla CEO appeared on Saturday night live. Kuwait’s central bank remarked that this press release was part of the bank’s “Be Aware” campaign or Diraya campaign in Arabic. Coordinated by the association of Kuwait banks, part of Diraya’s objectives is to improve financial awareness among the country’s citizens and promote socially responsible events within the Kuwait banking industry. The CBK highlighted the high energy cost of crypto mining operations in the statement and its environmental effects. It also gave reasons for its stance on cryptos like illegal trade deals, fraud, and money laundering.
Also read:CBK on Cryptocurrency Frauds and Scams
Part of the press release referred to the warning from the global central banks and the bank for international settlements, which stated that large value fluctuations in the crypto space are a big sign of danger. In addition, the CBK statement said that illegal trade deals and money laundering becomes easier with virtual assets since they are done between anonymous persons using anonymous nicknames or identities.
Last week, Elon Musk revealed that his electric car company, Tesla, has stopped allowing customers to use bitcoin to pay for tesla car purchases since bitcoin mining operations are toxic to the environment. However, musk’s statement has already been contradicted by new research. The research, titled “on bitcoin’s energy consumption: a quantitative approach to a subjective question,” carried out by galaxy digital, a cryptocurrency firm owned by Mike Novogratz, discovered that the traditional banking system’s energy consumption is twice that of bitcoin mining operations.
All these factors considered are probably the reason why the UAE wants a UAE digital currency which would soon be released to the public.
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