Afghanistan Shuts Down 16 Crypto Exchanges, Arrests Staff: Report

Crypto became critical for some in Afghanistan after the Taliban took power last year, but authorities are now cracking down on the local scene, reportedly shutting down at least 16 crypto exchanges in the country’s western Herat province.

The move comes three months after Afghanistan banned crypto trading in the country, local independent outlet Ariana noted on Wednesday. It did not mention which crypto exchanges were affected by the closures.

Sayed Shah Sa’adat, head of the police’s anti-crime unit, told reporters that the central bank banned crypto trading as the practice led to problems and fraud. All people involved in the local crypto businesses were arrested and their shops were closed, he said.

In June, Afghanistan’s Taliban-led central bank reportedly banned online currency trading. A spokesman told Bloomberg that the bank considers currency trading illegal and fraudulent and “there is no instruction in Islamic law to authorize it.”

It is not clear whether cryptocurrency trading, specifically, fell under the ban’s mandate.

After the Taliban returned to power in Afghanistan, the local population’s economic situation worsened as billions of dollars in foreign aid ceased and US sanctions froze its foreign assets.

The effects of the Taliban takeover increased local interest in cryptocurrencies, but sanctions made it difficult for citizens to purchase digital assets.

Google’s trend data shows that online searches for “bitcoin” and “crypto” had increased just before the takeover. Afghanistan even made it into the top 20 countries in Chainalysis’ 2021 Global Crypto Adoption Index, which charts the spread of digital assets worldwide.

Many advocates, including US Deputy Treasury Secretary Wally Adeyemo, have suggested that crypto payment rails offer the potential to overcome the burdens of living in complicated situations.

“Just imagine what a frictionless, global digital payment system with appropriate controls on illicit finance could do for people in places like Afghanistan – if relatives abroad could easily send money transfers, or if NGOs could pay their staff halfway around the world with a click button on a smartphone,” Adeyemo said at Consensus 2022 earlier this year.

Afghanistan’s central bank did not return Blockworks’ request for comment by press time.

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