– 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. They reentered power last year as American troops completed their withdrawal from the nation. 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.
Afghanistan’s central bank imposed a nationwide ban on crypto in August. According to a high-ranking police officer, 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. Due to sanctions against the insurgent group, Afghan economic sectors are disconnected from global banking systems.
Amid the crypto winter, outright bans are considerably less common. In September 2021, Afghanistan became the second country to enact a blanket ban on cryptocurrencies after China. 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.
A study by blockchain research firm Chainalysis shows Afghanistan as one of the top 20 countries in terms of crypto adoption last year. The Taliban stated they would examine if digital tokens adhere to Islamic financial practices as they look for ways to improve the economy. Taliban officials recently announced a ban on cryptocurrency, which some religious scholars had predicted. 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.
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After the Taliban takeover in Afghanistan, crypto adoption rates increased as it became critical for some locals. However, law enforcement is now reportedly clamping down on the scene. The Taliban regime has closed down at least 16 crypto exchanges in the western Herat province. 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.
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.
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. 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.