Taliban Had “Massive Deterrent Effect” On Afghan Crypto Market
The Taliban takeover of Afghanistan had a “massive deterrent effect” on the local cryptocurrency market, bringing it to a virtual standstill, according to a recent report.
Blockchain analysis firm Chainalysis stated in an Oct. 5 report that the Middle East and North Africa (MENA) region will see the largest crypto market growth in 2022, but noted that Afghan crypto traders have three options: “Out flee the country, shut down operations or risk arrest.”
The report states that after the Taliban took power in August 2021, the crypto value received in August and September of the same year surged to a peak of over $150 million and fell sharply the following month.
Before the takeover, Afghan citizens received an average of $68 million per month in cryptocurrencies, which were mainly used for remittances. That number plummeted to less than $80,000 after the takeover.
Afghanistan was ranked 20th in the 2021 Chainalysis Crypto Adoption Index released in October 2021. The country now comes last after the Taliban took power.
The reason for this change is the reinstated Ministry for the Propagation of Virtue and the Prevention of Vice, which enforces Islamic law in the country. Chainalysis says the agency equates cryptocurrencies with gambling and has outlawed them.
Citing an anonymous source, Chainalysis explained that cryptocurrencies are still being used in the country to launder money taken through bribes or drug trafficking.
The source added that of the overall activity, only a “small fraction are young people who have a few hundred dollars” to trade digital assets.