Kuwait International Bank (KIB) remains committed to its social responsibility and awareness efforts through its support of the ‘Let’s Be Aware’ (Diraya) campaign, launched by the Central Bank of Kuwait in cooperation with the Kuwait Banking Association. As part of this commitment, KIB has been shedding light on the dangers of trading and investing in virtual assets or cryptocurrencies on its various electronic and social media platforms. The Bank has also been sharing information about the negative impact of virtual investments on investors' and traders’ assets and funds.
Commenting on this issue, General Manager of KIB’s Investment Department Jamal Al-Barrak said: “We are witnessing major and rapid changes in the digital world. Innovative means of investment, such as virtual assets and cryptocurrencies, are emerging. While these new opportunities hold the potential for significant gains, KIB is aware of their various risks and negative impacts that investors and traders should also acknowledge. As a financial institution that adheres to regulations and statutes, KIB stresses the urgency of avoiding the use of or trade in digital currencies or digital assets, as they have no legal status and are not linked to any official issuing body.”
Al-Barrak then moved on to discuss the dangers of investing in encrypted virtual assets. He pointed out that citizens may be attracted to these investments because of their high returns and the desire to achieve quick profit. However, the reality is, he stated, that investing in virtual assets carries high risks, most notably the loss of the fully invested funds in a mere second, given that the prices of these assets are always driven by speculations that expose their value to sudden and unexpected sharp drops. Al-Barrak added: “Dealers and traders of digital assets should be aware that if things go wrong, they will not have any protection like when investing in a product subject to national banking regulations.”
Moreover, Al-Barrak addressed the electronic risks that threaten the assets of investors in virtual currencies. He said that digital trading and storage platforms could become exposed to piracy, cyberattacks, or electronic breaches. He explained that thousands of people trade on these platforms using cryptocurrencies, noting that each platform controls the prices and the form of transactions. Thus, if any of these platforms were electronically hacked and went out of service, the value of its currency will decrease within moments, and the entire trading movement will fluctuate, he said.
Highlighting the importance of KIB customers paying attention to the dangers of misleading advertisements, Al-Barrak said that social media platforms have become a breeding ground for inaccurate information and false promises. He called on all customers to practice extreme caution upon coming across advertisements for virtual assets that seem incredibly convincing. He said: “Most of the time, the identity of the issuers and marketers of these virtual currencies is unknown, or they hail from unknown or illegal entities. Therefore, virtual traders can use fake names or advanced technologies, such as artificial intelligence, to persuade investors with promises of quick and guaranteed returns.”
Concluding his remarks, Al-Barrak noted the importance of extensive investigation and research, and adequate study of any investment field to cover all its particulars. This would ensure that the investor achieves positive results and maintains their capital. On the other hand, he stressed the need for joint action between banking institutions to raise investors' and citizens' awareness of the risks surrounding investing in virtual assets and cryptocurrencies in order to protect the national financial system.