Saturday, 28 January 2023

Crypto News

What the Taliban crackdown means for crypto’s future in Afghanistan

What the Taliban crackdown means for crypto's future in Afghanistan

With the rise of the Taliban last year in August, Afghanistan faced global sanctions that led to many international organizations and money transaction services halting operations in the country. This made room for digital currencies and stablecoins to be widely used, at least to send or receive remittances.

However, the Taliban government has recently banned cryptocurrencies and arrested 16 local exchangers in the Northwestern city of Herat in the past week, according to the provincial news website ATN-News.

According to the report, the exchanges were initially given a grace period to comply with the government’s regulations but were ultimately shut down after failing to do so. The Afghan government has now asked locals to refrain from using digital assets and has warned them of the risks associated with such activities.

However, people familiar with the matter, those who want to stay anonymous due to security reasons, have told Cointelegraph that “no previous announcement or warnings were given.”

“Da Afghanistan Bank (central bank) stated in a letter that digital currency trading has caused lots of problems and is scamming people, therefore they should be closed. We acted and arrested all the exchangers involved in the business and closed their shops,” the head of the counter-crime unit of Herat police, Sayed Shah Sa’adat, told ATN-News.

People familiar with the matter believe there were no crypto-related scams involved in the government’s “stupid” decision. “We mostly used the Binance crypto exchange and a wallet to trade, send or receive assets,” they added. “Right now, we don’t have standard banks or monetary services, and the Taliban banned our only hope.”

In June, the Taliban-led central bank of Afghanistan banned online forex trading in the country. A spokesman told Bloomberg that the bank views forex trade as being both illegal and fraudulent, saying “there is no instruction in Islamic law to approve it.” After the Taliban regained power in Afghanistan, local residents’ finances worsened as billions of dollars in foreign aid were cut off and their overseas assets were frozen under United States sanctions, per Bloomberg.

Why did the Taliban ban crypto?

According to the ATN-News report, the main reasons for the ban are the volatile nature of cryptocurrencies and assets like the U.S. dollar leaving the country since crypto exchanges are not based in Afghanistan. Another reason noted in the report is that digital…

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