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Afghanistan

Retail_Trading_Status

Banned Unknown
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Analysis ID
#127
Version
Archived
Created
2025-04-12 06:48
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Live

Executive Summary

Cryptocurrency trading is banned in Afghanistan following a mid-2022 decision by the Taliban administration through Da Afghanistan Bank (DAB). The ban stems from concerns about fraud, volatility, money laundering, and religious interpretations deeming it "haram". Enforcement actions included shutting down exchanges and arresting dealers. Despite reports of potential discreet usage by some Taliban members, the official legal status remains a strict prohibition for the general population.

Key Pillars

The primary regulator is Da Afghanistan Bank (DAB), which implemented a nationwide ban on cryptocurrency trading and holding. There are no compliance requirements for cryptocurrency platforms, such as AML/KYC rules, as the activity itself is prohibited. There are no licensing or registration requirements for cryptocurrency exchanges or dealers because cryptocurrency activity is illegal.

Landmark Laws

In mid-2022, the Taliban administration, through the central bank (Da Afghanistan Bank - DAB), implemented a nationwide ban on cryptocurrency trading and holding. In June 2022, an earlier ban on online foreign exchange trading was implemented. The cryptocurrency ban prohibits all cryptocurrency trading and holding activities within Afghanistan and carries significant legal risks.

Considerations

Cryptocurrencies are considered 'haram' (forbidden) under Islamic law due to their speculative nature. The Taliban administration is concerned about fraud, scams, volatility, and the potential for money laundering associated with cryptocurrency. Despite the ban, the decentralized nature of cryptocurrencies allows for discreet peer-to-peer usage, and reports from late 2024 suggest that some Taliban members might be discreetly trading memecoins themselves. The official legal status, however, remains a strict prohibition for the general population.

Notes

Prior to the ban in mid-2022, Afghan citizens increasingly used cryptocurrencies due to disruptions in the formal banking system following the Taliban's return to power in August 2021. This was due to international sanctions, frozen central bank assets, and the suspension of SWIFT. Enforcement actions included shutting down numerous cryptocurrency exchanges in August 2022, particularly in Herat, and arresting dealers. Reports from late 2024 suggest a potential contradiction, with claims that some Taliban members might be discreetly trading memecoins themselves, despite the public ban.

Detailed Explanation

Following the Taliban's ascent to power in August 2021, Afghanistan's formal banking system faced significant challenges due to international sanctions, frozen central bank assets, and the suspension of SWIFT payments. This disruption spurred Afghan citizens to increasingly adopt cryptocurrencies for savings, remittances, and transactions outside the traditional banking system. Afghanistan ranked 20th in Chainalysis's 2021 Global Crypto Adoption Index, reflecting this surge.

However, this period of widespread cryptocurrency use was short-lived. By mid-2022, the Taliban administration, through Da Afghanistan Bank (DAB), implemented a nationwide ban on cryptocurrency trading and holding. This followed an earlier ban on online foreign exchange trading in June 2022. The stated rationale behind the cryptocurrency ban included concerns about fraud, scams, volatility, and the potential for illicit activities like money laundering. Religious considerations also played a role, with authorities deeming cryptocurrency trading "haram" (forbidden under Islamic law) due to its speculative nature, drawing parallels to gambling.

Enforcement actions were swift and decisive. In August 2022, reports surfaced of authorities shutting down numerous cryptocurrency exchanges, particularly in Herat, a known hub for such activities. Estimates ranged from 16 to over 20 closures. Arrests of cryptocurrency dealers who defied the ban were also reported. These actions effectively halted the burgeoning crypto market in Afghanistan, causing a significant drop in its global adoption ranking.

While the decentralized nature of cryptocurrencies makes complete eradication challenging, and some discreet peer-to-peer usage may persist, the official stance remains firm. Engaging in cryptocurrency trading or related activities is illegal for individuals and businesses in Afghanistan and carries legal risks, including arrest and prosecution. There are no regulations permitting or governing cryptocurrency activity, such as KYC/AML rules, because the activity itself is prohibited. Recent reports from late 2024 suggest a potential contradiction, with claims that some Taliban members might be discreetly trading memecoins themselves, despite the public ban. However, this does not change the official legal status for the general population, which remains a strict prohibition.

Summary Points

Retail Cryptocurrency Trading Status in Afghanistan (April 12, 2025)

I. Overall Regulatory Status:

  • Banned: Retail cryptocurrency trading and holding are illegal for individuals and businesses in Afghanistan.

II. Key Regulatory Bodies and Roles:

  • Da Afghanistan Bank (DAB) - Central Bank:
    • Implemented the nationwide ban on cryptocurrency trading and holding.
    • Cited concerns about fraud, scams, volatility, and money laundering as reasons for the ban.
    • Declared cryptocurrency trading "haram" (forbidden under Islamic law).
  • Taliban Administration:
    • Enforces the ban through law enforcement agencies.
    • Shut down cryptocurrency exchanges and arrested dealers.
    • Supports the DAB's rationale for the ban, including religious interpretations.
  • Herat Police (Counter-Crime Unit):
    • Actively enforced the ban by closing down exchanges and arresting dealers in the Herat province.

III. Important Legislation and Regulations:

  • Nationwide Ban on Cryptocurrency Trading and Holding (Mid-2022):
    • Prohibits individuals and businesses from buying, selling, or holding cryptocurrencies.
    • No regulations exist to govern or permit cryptocurrency activity.
  • Earlier Ban on Online Foreign Exchange Trading (June 2022):
    • Preceded the cryptocurrency ban, indicating a broader trend of restricting online financial activities.

IV. Requirements for Compliance:

  • Complete Prohibition: No compliance requirements exist, as the activity is entirely prohibited.

V. Notable Restrictions or Limitations:

  • Total Ban: Individuals and businesses are prohibited from engaging in any cryptocurrency-related activities.
  • Enforcement: Authorities actively shut down exchanges and arrest individuals who defy the ban.
  • Religious Justification: The ban is supported by religious interpretations that consider cryptocurrency trading "haram."
  • No Legal Recourse: Engaging in cryptocurrency trading carries significant legal risks, including arrest and prosecution.

VI. Recent Developments or Changes:

  • Taliban Members' Potential Discreet Trading:
    • Reports suggest some Taliban members might be discreetly trading memecoins despite the public ban.
    • This does not change the official legal status for the general population, which remains a strict prohibition.
  • Impact on Adoption:
    • The ban has brought the burgeoning crypto market in Afghanistan to a standstill.
    • Afghanistan's rank in global crypto adoption indices has plummeted.
  • Continued Peer-to-Peer Usage:
    • Some discreet peer-to-peer usage may persist out of necessity, but it remains illegal.

Full Analysis Report

Report: Retail Cryptocurrency Trading Status in Afghanistan

Date: April 12, 2025

Analyst: Specialized Financial Regulatory Analyst


Topic: Retail_Trading_Status

Description: Assess whether individual citizens and residents in Afghanistan are legally permitted to buy, sell, and hold cryptocurrencies. Detail the regulatory environment surrounding this activity (e.g., KYC/AML requirements imposed on platforms, general warnings issued).


1. Current Status: Banned

2. Detailed Narrative Explanation:

Following the Taliban's return to power in August 2021, Afghanistan experienced significant disruption to its formal banking system due to international sanctions, the freezing of central bank assets held abroad, and the suspension of international payment systems like SWIFT [8, 20]. This economic turmoil led to a surge in the use of cryptocurrencies by Afghan citizens as a means to preserve savings, receive remittances from abroad, and conduct transactions outside the crippled banking infrastructure [3, 5, 7, 8, 21]. Afghanistan notably ranked 20th in Chainalysis's 2021 Global Crypto Adoption Index, highlighting this trend [6, 8].

However, this period of de facto utility was short-lived. In mid-2022, the Taliban administration, through the central bank (Da Afghanistan Bank - DAB), implemented a nationwide ban on cryptocurrency trading and holding [2, 3, 4, 13]. This followed an earlier ban on online foreign exchange trading in June 2022 [5, 7, 12].

The stated reasons for the cryptocurrency ban were multifaceted. Officials cited concerns about fraud, scams targeting citizens, the inherent volatility of cryptocurrencies, and the potential for illicit activities like money laundering [3, 5, 7, 11]. Furthermore, religious interpretations played a significant role, with authorities declaring cryptocurrency trading "haram" (forbidden under Islamic law) due to its speculative nature, comparing it to gambling [7, 9, 12, 16, 17]. The central bank explicitly stated that digital currency trading caused problems and scammed people, justifying the crackdown [7].

Enforcement actions were taken swiftly. Reports emerged in August 2022 of authorities shutting down numerous cryptocurrency exchanges, particularly in the western province of Herat (a known hub for such activities), with estimates ranging from 16 to over 20 closures [3, 5, 7, 14, 15]. Arrests of cryptocurrency dealers who defied the ban were also reported [3, 5, 7, 10, 13, 15]. These actions effectively brought the burgeoning crypto market in Afghanistan to a standstill, causing its rank in global adoption indices to plummet [6, 8].

While the decentralized nature of cryptocurrencies makes a complete eradication difficult, and some discreet peer-to-peer usage may persist out of necessity [3], the official stance is unequivocal. Engaging in cryptocurrency trading or related activities is illegal for individuals and businesses in Afghanistan and carries significant legal risks, including arrest and prosecution [3, 11, 14]. There are no regulations permitting or governing the activity, such as KYC/AML rules for platforms, because the activity itself is prohibited. Recent reports from late 2024 suggest a potential contradiction, with claims that some Taliban members might be discreetly trading memecoins themselves, despite the public ban [6, 16, 17]. However, this does not change the official legal status for the general population, which remains a strict prohibition.

3. Supporting Excerpts from Sources:

  • On the Ban: "In August 2022 Taliban banned trading in cryptocurrencies." (Source: Wikipedia [2])
  • On the Ban: "Afghanistan banned cryptocurrency again in 2022 under Taliban rule. Again, the reason was financial instability and fraud concerns." (Source: CCN.com [3], Feb 2025)
  • On the Ban & Enforcement: "Afghanistan's central bank imposed a nationwide ban on cryptocurrencies this month [August 2022] and the Taliban regime has arrested several dealers who defied orders to stop trading digital tokens." (Source: Bangkok Post / Bloomberg [13], Aug 2022)
  • On Central Bank Rationale & Enforcement: “‘Da Afghanistan Bank (central bank) stated in a letter that digital currency trading has caused lots of problems and is scamming people, therefore they should be closed. We acted and arrested all the exchangers involved in the business and closed their shops,’ the head of the counter-crime unit of Herat police, Sayed Shah Sa'adat, told ATN-News." (Source: Cointelegraph [7], Aug 2022)
  • On Islamic Law Rationale: "In Afghanistan, the Taliban banned all forms of crypto and digital assets, declaring it haram and not an allowed Muslim practice due to its speculative nature." (Source: Fideum [9], Aug 2024)
  • On Islamic Law Rationale (Central Bank): "Also in 2022, the central bank banned cryptocurrency trading – also on the grounds of it being sinful." (Source: PAYF [referencing Ariana News] [12])
  • On Enforcement in Herat: "Police in the city of Herat have started enforcing a nationwide ban on digital assets trading imposed by the central bank, Da Afghanistan Bank, this month. Sayed Shah Sa'adat, the head of the counter-crime unit of the city's police, told Bloomberg that over 20 digital asset businesses had been closed down. The police also arrested 13 digital asset dealers for defying the ban..." (Source: CoinJournal / Bloomberg [15], Aug 2022)
  • On Impact: "The Taliban ban on digital currency has brought Afghanistan's cryptocurrency market, which experienced a massive expansion after the insurgent group took over the country in August last year, to a standstill..." (Source: OCCRP [8], Oct 2022)

4. Source URLs:

  • [2] Wikipedia - Legality of cryptocurrency by country or territory: https://en.wikipedia.org/wiki/Legality_of_cryptocurrency_by_country_or_territory (Specific section on Afghanistan/Central Asia)
  • [3] CCN.com - 10 Countries Where Crypto Remains Banned in 2025: https://www.ccn.com/analysis/10-countries-crypto-banned-2024/ (Archived or updated version may be needed for 2025 claim verification, but content reflects ban)
  • [4] Cryptocurrency Regulation Tracker (Ince Gordon Dadds LLP): https://www.incegd.com/en/knowledge-bank/cryptocurrency-regulation-tracker (Check under Afghanistan - status may vary slightly based on update frequency but reflects ban)
  • [5] TRT World - Why is the Taliban clamping down on crypto exchanges in Afghanistan?: https://www.trtworld.com/magazine/why-is-the-taliban-clamping-down-on-crypto-exchanges-in-afghanistan-60180
  • [6] Cryptopolitan on Binance Square - Afghanistan's Taliban Actively Trades Crypto Memecoins Despite Imposing Nationwide Ban: https://www.binance.com/en/square/post/4331636737016 (Note: Binance Square content; cross-verify claims if possible)
  • [7] Cointelegraph - What the Taliban crackdown means for crypto’s future in Afghanistan: https://cointelegraph.com/news/what-the-taliban-crackdown-means-for-crypto-s-future-in-afghanistan
  • [8] OCCRP - The Taliban Crackdown Freezes Afghanistan’s Crypto Market: https://www.occrp.org/en/daily/16887-the-taliban-crackdown-freezes-afghanistan-s-crypto-market
  • [9] Fideum - Crypto regulations around the world: https://fideum.com/blog/crypto-regulations-around-the-world/
  • [10] PYMNTS.com - Today in Crypto: Taliban Bans Crypto, Arrests Dealers...: https://www.pymnts.com/cryptocurrency/2022/today-in-crypto-taliban-bans-crypto-arrests-dealers-grayscale-tells-sec-that-3-crypto-coins-may-be-securities/
  • [11] (Similar to [3]) Finance Magnates - Cryptocurrency Is Still Restricted or Prohibited in These 10 Countries in 2025: https://www.financemagnates.com/cryptocurrency/regulation/cryptocurrency-is-still-restricted-or-prohibited-in-these-10-countries-in-2025/
  • [12] PAYF Bulletin (Referencing Ariana News) - Afghanistan's Central Bank Approves Exchange and Money Services Law: https://payf.org.pk/payf-bulletin/afghanistans-central-bank-approves-exchange-and-money-services-law/
  • [13] Bangkok Post (Referencing Bloomberg) - Taliban ban crypto in Afghanistan, arrest digital coin dealers: https://www.bangkokpost.com/business/general/2376603/taliban-ban-crypto-in-afghanistan-arrest-digital-coin-dealers
  • [14] Remitano Forum (Referencing Ariana News) - Afghan Police Seized 16 Crypto Exchanges Over The Last Week: https://remitano.com/forum/ng/post/19711-afghan-police-seized-16-crypto-exchanges-over-the-last-week
  • [15] CoinJournal (Referencing Bloomberg) - Several exchanges in Afghanistan's Herat close shops as ban on digital assets takes effect: https://coinjournal.net/news/several-exchanges-in-afghanistans-herat-close-shops-as-ban-on-digital-assets-takes-effect/
  • [16, 17] Cryptopolitan / Crypto News Flash (Similar content) - Afghanistan's Taliban actively trades crypto memecoins despite imposing nationwide ban: https://www.cryptopolitan.com/afghanistans-taliban-trades-crypto-memecoins/ and https://www.crypto-news-flash.com/afghanistans-taliban-actively-trades-crypto-memecoins-despite-imposing-nationwide-ban/
  • [19] Da Afghanistan Bank (Official Website): https://dab.gov.af/en (Note: Specific decree or statement on crypto ban may not be easily accessible here, but it's the relevant authority's site).
  • [20] DAWN.COM (Referencing Reuters) - Afghan central bank's $10bn stash mostly out of Taliban's reach: https://www.dawn.com/news/1641412
  • [21] The Intercept - STARVING AFGHANS USE CRYPTO TO SIDESTEP SANCTIONS, TALIBAN: https://theintercept.com/2022/01/28/afghanistan-crypto-taliban-sanctions-starvation/ (Provides context on pre-ban usage)

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