- The country’s central bank banned crypto one month ago.
- Severe economic sanctions have been imposed on Afghanistan.
The Taliban starts targeting anyone who deals in crypto. Bloomberg reports that the Taliban government in Afghanistan is detaining cryptocurrency traders who continue to operate after being told to halt. One month after the country’s central bank banned crypto, authorities have begun cracking down.
Sayed Shah Saadaat, chief of criminal investigations for the Herat police, said:
“The central bank gave us an order to stop all money changers, individuals, and businesspeople from trading fraudulent digital currencies like what is commonly referred to as Bitcoin.”
Crypto in Demand Due to Sanctions
The third-largest city in Afghanistan, Herat is home to four of the country’s six cryptocurrency exchanges. According to Saadaat, 13 persons have been detained and 20 cryptocurrency firms have been shut down in the city.
Prior to the prohibition on all cryptocurrencies by the central bank, demand for cryptocurrencies in Afghanistan was significant, particularly stablecoins. They provide customers with a protected place to store capital and a mechanism to transfer funds domestically or internationally. Stablecoins are digital currencies designed to maintain a stable value relative to a fiat currency like the US dollar or the Euro.
Severe economic sanctions have been imposed on Afghanistan during the 1990s. Shortly after the Taliban retook Kabul and returned to power, the Biden administration imposed further sanctions and confiscated almost $7 billion in Afghan treasury assets at the Federal Reserve Bank of New York.
There are several countries with strict regulations on cryptocurrency, not just Afghanistan. Maintaining the value of the currency was a priority for Russian President Vladimir Putin, who recently approved a bill making the use of cryptocurrencies for financial transactions illegal. In the summer of 2021, China notably outlawed cryptocurrency use and Bitcoin mining.
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