What the Taliban Crackdown Means for the Future of Crypto in Afghanistan

The Taliban finally banned crypto in Afghanistan, but many users and marketers call it one of the "worst" decisions ever made by the government so far.

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

However, the Taliban government recently banned cryptocurrencies and shut down 16 local exchangers in the northwestern city of Herat last week, according to provincial news site ATN-News.

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

However, people familiar with the matter, those who wish to remain anonymous for security reasons, told Cointelegraph that “no prior announcement or warning was given.”

"Da Afghanistan Bank (central bank) said in a letter that digital currency trading has caused a lot of trouble and is scamming people, therefore, they should be shut down. We have taken action and stopped all exchangers involved in business and shut down their stores,” the head of the Herat Police’s crime-fighting unit, Sayed Shah Sa’adat, told ATN-News.

People familiar with the matter believe there were no crypto-related scams involved in the government's "dumb" decision. “We mainly used the Binance crypto exchange and a wallet to exchange, send or receive assets,” they added. "At the moment, we don't have standard banks or money services, and the Taliban have banned our only hope."

In June, the Taliban-run Central Bank of Afghanistan banned online currency trading in the country. A spokesperson told Bloomberg that the bank considers forex trading to be both illegal and fraudulent, saying "there are no instructions in Islamic law to endorse it." After the Taliban regained power in Afghanistan, local residents' finances deteriorated as billions of dollars in foreign...