Last week’s market-wide price crash caused central banks around the world to issue warnings about the risks of investing in cryptocurrencies.
The Central Bank of Kuwait was no exception, and on Saturday issued a statement warning the public about the volatility in cryptocurrency markets.
The Central Bank of Kuwait, or CBK, states that crypto assets are not real currencies, even though they are commonly called cryptocurrencies. According to the statement, only a legitimate state can issue real currency as a symbol of sovereignty:
“Real currency is controlled by state officials such as central banks or monetary institutions. It is considered and accepted as a repository of price and legal tender. It serves as a reliable medium for exchange. “
The statement cited Dogcoin (DOGE) as one of the most prominent cryptocurrencies by market cap, bitcoin (BTC) and ether (ETH). Dogcoin is known for a meteorite surge earlier this year after repeated mentions of mem-original coins on social media by Elon Musk. However, Dogcoin took a quick dive after Tech Mogul’s appearance on Saturday Night Live.
CBK noted that the warning is a part of the bank’s Diarya campaign, which translates into Arabic as “be aware”. Managed by the Kuwait Banking Association, Diraya aims to raise financial awareness in the country and encourage social responsibility activities in the Kuwaiti banking sector.
After listing specific beef about crypto, such as money laundering, fraud, and unauthorized transactions, CBK noted that the environmental costs of energy-intensive crypto mining operations.
Recently, Elon Musk announced that electric car maker Tesla would stop accepting bitcoin as payment due to its potentially harmful effects on the environment. However, according to a new study by Mike Novogratz’s Galaxy Digital, traditional banking uses twice as much energy than bitcoin annually.