Lebanese people turn to crypto amid country’s economic collapse: Report

Some of the tech-savvy youth in Lebanon have reportedly shifted their focus to cryptocurrencies amid the current money crunch

Earlier this week, the government closed all local banks due to ongoing risks to staff and customers. It is still unknown when the financial institutions will reopen, which may be one reason why locals started looking for alternative financial instruments, including digital assets.

Crypto to the rescue

The economic situation in Lebanon worsened after the government closed all domestic banking institutions until further notice. Thus, people who want to withdraw their money can do so at a significant loss or withdraw checks denominated in US dollars, which are then sold for a fraction of their value – currently about 20%.

On the other hand, those willing to do something with their savings need to act fast because the Lebanese pound is falling daily.

According to a recent Reuters report, some locals (mainly young people with enough knowledge about innovations in technology) have started dealing in cryptocurrencies because of this backlash.

Mario Awad – a Lebanese HODLer – told the media that many politicians, security officers, TV personalities and celebrities have also bought bitcoin or altcoins recently.

Another person, who introduced himself as Ahmad, claimed that cryptocurrencies are “100 times more real than the dollars” Lebanese have in banks.

According to the coverage, the favorite of local investors is the world’s largest stablecoin – Tether (USDT). Its value is pegged to the US dollar, and in theory should remain unaffected by the notorious volatility of the crypto market.

The Lebanese government has yet to put the digital asset sector under supervision. However, the lack of regulations does not appear to be a problem for domestic investors, most of whom do not trust the actions of the governing body.

“For many, it is seen as a good thing because we do not live in a country where regulations and politicians give us hope – quite the opposite. But it harms widespread use (of cryptocurrency)”, opined one of the traders.

It is worth noting that crypto mining is also thriving in Lebanon mainly due to the cheap electricity prices. The local miner spoke on the matter, who revealed himself as Jad:

“Even if you make $10 a day with a regular computer, it’s now several times the minimum wage. After what we have been through, I will never put a cent back in a Lebanese bank.”

The crisis in Lebanon

Lebanon has been battling a deep economic crisis for a couple of decades. While the country was one of the most developed states in the Arab region until 1975, a civil war that lasted until 1990 changed this trend.

The military conflict caused massive loss of life and property and destroyed the country’s financial system. Parts of Lebanon were left in ruins, while the leading political parties continued to divide society years after the end of the war.

Violent incidents were not absent after 1990 when the nation’s forces clashed several times with Israel’s army, while in 2005 Prime Minister Rafic Hariri was assassinated in a car bomb explosion. Political figures blamed Syria for the assassination, so a new conflict began.

Despite the fact that they have not been so heavily involved in the war effort in recent years, civilian demonstrations and terrorist bomb attacks are not absent in Lebanon.

Needless to say, the turbulence in the country has caused a huge wave of migration over the years. Currently, up to 14 million Lebanese live outside their homeland (twice as many as the population of Lebanon itself).

Apart from seeking a peaceful environment for themselves and their families, these individuals also escaped a country where the economic network is barely functioning. The current inflation rate in Lebanon is over 160%, while the recent bank closures only intensified the problem.

The increased interest in cryptocurrencies shown by local people due to the ongoing situation is nothing new. Residents of other countries, including Argentina and Turkey, have also jumped on the bandwagon due to worrying inflation or political unrest.