- Taliban puts a blanket over the crypto industry and arrests those defying the law
- Afghans suffer financial setbacks under the current crypto market situation; the industry they found a haven
- 16 crypto exchanges shut down in the country
- Crypto branded “Haram” in the Islamic Emirate of Afghanistan
The Taliban has seized virtually all of Afghanistan. The Taliban reentered power last year as American troops completed their withdrawal from the nation. This is 20 years after removing the regime for the first time.
Following its lightning offensive that began in Kandahar, the armed group reestablished control over the country on August 15, 2021. In modern-day Afghanistan, the Taliban has taken command of the cryptocurrency sector.
Taliban puts crypto under its rule
According to a high-ranking police officer, Afghanistan’s central bank imposed a nationwide ban on crypto in August. Furthermore, the Taliban regime has detained several dealers who continued to trade digital currencies despite being told to cease.
The clampdown follows after some Afghans have continually used digital assets to store their money from the Taliban’s grip. Crypto is becoming increasingly popular to transfer funds within and out of the country. Due to sanctions against the insurgent group, Afghan economic sectors are disconnected from global banking systems.
Despite the fact that several nations are tightening crypto rules in the wake of a market collapse that eliminated $2 trillion in wealth and induced notable firms into bankruptcy, outright bans are considerably less common. In September 2021, Afghanistan became the second country to enact a blanket ban on cryptocurrencies after China.
According to official reports, the Taliban has arrested 13 people in relation to the recent surge of crypto trading, most of whom have been released on bail. In addition, over 20 crypto-related businesses have ceased operation in Herat–Afghanistan’s third largest city and a key location for digital token trading.
The city of Herat, which is 75 miles (121 kilometers) from the Iranian border, has four out of the six crypto brokerages in Afghanistan. These exchanges are located in Taliban-controlled regions.
The crypto environment in Afghanistan grows tough
According to a study by blockchain research firm Chainalysis, Afghanistan was one of the top 20 countries in terms of crypto adoption last year. The results were adjusted for purchasing power parity per capita, which benefits poorer nations.
In February, the Taliban stated they would examine if digital tokens adhere to Islamic financial practices as they look for ways to improve the economy. The economy had failed after last year’s withdrawal of US forces resulted in the Taliban taking control.
Taliban officials recently announced a ban on cryptocurrency, which had been predicted by some religious scholars. These experts had feared that the digital currency would be seen as “haram,” or forbidden to Muslims because it has characteristics of gambling and is uncertain in value.
However, other Muslim-majority nations have been more forgiving. Dubai’s free zone in the United Arab Emirates allows crypto trading, whereas Bahrain has supported digital assets since 2019.
Afghanistan shuts down 16 crypto exchanges
After the Taliban takeover in Afghanistan last year, crypto adoption rates increased as it became critical for some locals. However, law enforcement is now reportedly clamping down on the scene.
Nevertheless, the Taliban regime has closed down at least 16 crypto exchanges in the western Herat province. However, there have been no official reports about which the closures impacted crypto exchanges.
According to Bloomberg, in June, the Taliban-led central bank in Afghanistan reportedly banned online foreign exchange trading because its spokesman views it as fraudulent and illegal. He went on to state that there is no instruction in Islamic law approving such trade.
Da Afghanistan’s 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.Sayed Shah Sa’adat, head of the counter-crime unit of Herat police
It is currently unclear if cryptocurrency trading falls under the banned category. The Taliban’s takeover boosted cryptocurrency interest locally, but sanctions made it difficult for citizens to acquire digital assets. According to Google trends data, web searches for “bitcoin” and “crypto” rose dramatically before the Taliban takeover.
Many people have found financial independence thanks to the overall digital assets market. Crypto was created with the intention of being decentralized and free of censorship. This is one of the reasons why Afghans turned to crypto as their country fell under Taliban rule.
Unfortunately, things are looking bad for crypto investors. The Taliban is shepherding in an age of financial censorship. But there’s still hope! Proponents of the cryptocurrency revolution continue to stand strong. Wally Adeyemo, the Deputy Secretary of Treasury in the United States of America, is one out of many people who support cryptocurrency as a way to improve the quality of life for those living in difficult situations.