Bangladesh

**Report: Retail Cryptocurrency Trading Status in Bangladesh**

**Date:** April 13, 2025

**Analyst:** Specialized Financial Regulatory Analyst AI

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**Topic: Retail_Trading_Status**

**Description:** Assess whether individual citizens and residents in the country 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)

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**1. Identified Status:**

**Gray-Zone**

**2. Detailed Narrative Explanation:**

The status of retail cryptocurrency trading in Bangladesh is best described as a **Gray-Zone**. While there isn't a specific law explicitly criminalizing the mere possession of cryptocurrencies for individuals, the country's central bank, Bangladesh Bank (BB), has consistently and strongly discouraged and effectively prohibited transactions involving cryptocurrencies. This prohibition is enforced through warnings and directives based on existing financial regulations, primarily the Foreign Exchange Regulation Act (FERA), 1947, the Money Laundering Prevention Act (MLPA), 2012, and the Anti-Terrorism Act (ATA), 2009.

Bangladesh Bank first issued warnings against cryptocurrencies like Bitcoin in 2014 and reiterated these warnings, notably in 2017 and subsequent years. The core stance of the BB is that cryptocurrencies are not legal tender in Bangladesh, are not issued or approved by any central authority or payment system, and engaging in transactions with them could lead to financial harm and legal repercussions under the aforementioned acts. Specifically, transactions are deemed potentially violative of FERA concerning unauthorized dealings in foreign exchange, and MLPA and ATA concerning money laundering and terrorism financing risks.

Circulars issued by the BB have explicitly instructed banks and financial institutions to refrain from providing *any* services related to virtual asset or cryptocurrency transactions. This includes buying, selling, transferring, or facilitating such activities through customer accounts. Banks are mandated to increase monitoring to prevent these transactions and display cautionary notices to the public. Violation of these directives, particularly under FERA, can carry significant penalties, including imprisonment.

Despite this strong prohibitive stance on transactions and facilitation, some ambiguity exists. In response to a query from the Criminal Investigation Department (CID), the BB reportedly clarified that while ownership or transactions are not *recognized* by the bank, they do not *appear* to be a crime in themselves. However, the same clarification noted that such transactions *can* become criminal offenses if they violate FERA, MLPA, or ATA. This distinction suggests that while holding crypto might not be explicitly illegal *per se*, engaging in almost any practical use (trading, transacting) falls foul of existing regulations as interpreted and enforced by the central bank.

Furthermore, legal analyses have pointed out that cryptocurrencies might not strictly fit the definition of "currency" under the FERA 1947, potentially questioning the legal foundation of the BB's warnings under that specific act. However, the practical effect of the BB's consistent warnings, directives to banks, and invocation of MLPA and ATA creates a highly restrictive environment that strongly discourages retail participation.

Adding to the complexity, despite the official stance, there is evidence of an active underground or informal market for cryptocurrencies in Bangladesh. Individuals reportedly use international platforms (which often enforce their own KYC/AML but are not regulated *by* Bangladesh) and peer-to-peer (P2P) networks, often involving local agents, to buy and sell crypto, sometimes using foreign currency endorsements on cards or informal cash methods. This occurs outside the formal banking system and regulatory oversight.

The government has shown interest in the underlying blockchain technology, evidenced by the publication of a "National Blockchain Strategy" in 2020, aiming to leverage the technology for e-governance and innovation. However, this interest has not translated into any relaxation of the restrictive stance towards cryptocurrencies themselves. There are no specific regulations for licensing crypto exchanges, imposing KYC/AML requirements on local crypto platforms (as they are effectively prohibited), or specific tax guidelines for crypto assets within Bangladesh.

Therefore, the situation is neither clearly "Allowed" (Regulated or Unregulated) nor a straightforward "Banned" scenario based on a specific crypto law criminalizing possession. It exists in a gray area where transactions are prohibited through the application of existing financial laws, strongly enforced by the central bank, while the absolute legality of mere passive holding remains somewhat ambiguous, even as practical engagement is heavily restricted and carries legal risks.

**3. Relevant Text Excerpts & Sources:**

*   **On Prohibition of Transactions & Legal Basis:**
    *   "Bangladesh Bank issued its first “warning” against the use of Bitcoin in 2014. The warning included caution towards transacting in any artificial currency as this could involve unauthorized actions stated in Foreign Exchange Regulation Act, 1947 and the Money Laundering Prevention Act, 2012." (Mahbub & Company / The Daily Star) [4, 6]
    *   "In its public notice, Bangladesh Bank said transaction through any virtual currency will not be allowed as per the Foreign Exchange Regulation Act 1947, the Money Laundering Prevention Act 2012 and the Anti-Terrorism Act, 2009." (The Daily Star) [12]
    *   "Any transactions made in/from/to Bangladesh for obtaining virtual assets or its subset- virtual currencies, are not permitted by Bangladesh Bank. Providing any kind of facilitation in favour of doing business, activities, and operations associated with exchange/transfer/trading of virtual assets or virtual currencies, are not permitted, as well." (The Business Standard, citing BB Circular) [8]
    *   "Any such transaction in defiance of the instructions shall be an offense punishable under Section 23(1) of the Foreign Exchange Control Act. The punishment in such cases could be imprisonment for seven years or fine or both." (The Business Standard, citing BB Circular) [7, 8]

*   **On Ambiguity / Clarification:**
    *   "Bangladesh Bank is yet to recognize cryptocurrency as a legal currency, but has made it clear that the ownership or transaction of the digital currency is not a crime... 'Even if the ownership, preservation or transaction of cryptocurrency is not recognised, it does not appear to be a crime,' he explained the central bank's position. According to the letter, transactions in virtual currencies can, however, be listed as crimes in the second phase of the Foreign Exchange Control Act 1947, Anti-Terrorism Act 2009 and the Prevention of Money Laundering Act 2012." (The Financial Express, reporting on BB clarification to CID) [2]
    *   "...it is evident that the regulator has fallen short of “banning” or “criminalising” the use of bitcoin except in cases where it is used to commit an existing offence under the Foreign Exchange Regulation Act, the Anti-Money Laundering Act and the Anti-Terrorism Act." (Mahbub & Company / The Daily Star) [4, 6]
    *   "In Bangladesh, the legal status of owning and trading cryptocurrency is somewhat ambiguous. According to Bangladesh Bank, while cryptocurrency ownership and transactions are not officially recognized, they are not considered criminal activities per se. The central bank has clarified that while these activities are not illegal, they are not legally sanctioned either." (CEX.IO) [10]
    *   "Despite the absence of an official law explicitly banning cryptocurrency, the country's regulatory bodies have made it clear that the use of crypto is strongly discouraged... regulatory confusion persists, and the legal status of crypto ownership remains unclear as of 2025..." (AInvest) [9]

*   **On Directives to Banks:**
    *   "The Bangladesh Bank has ordered to tighten monitoring to be more cautious to stop the transaction and other activities regarding cryptocurrencies including bitcoin... The circular ordered the banks to take steps to stop any kind of assistance in such activities and to increase monitoring in this purpose." (The Business Standard) [7]
    *   "All banks, non-bank financial institutions and mobile financial service providers such as bKash and Nagad are prohibited from exchanging, transferring or trading virtual assets and currencies..." (The Business Standard, citing BB official) [8]

*   **On Underground Market:**
    *   "Despite this, there is a thriving underground market where individuals regularly engage in cryptocurrency trading, largely unnoticed by the authorities. Apps such as Binance and KuCoin, which are designed for trading crypto, are easily accessible... The process of acquiring cryptocurrencies in Bangladesh typically happens in one of two ways... a more secretive method that involves local agents." (The Financial Express) [14]

**4. Source URLs:**

*   **[2] The Financial Express (BB Clarification):** `https://thefinancialexpress.com.bd/economy/cryptocurrency-trading-neither-legal-nor-crime-bb-1658984186` (Archived/similar reports may exist if link is broken)
*   **[3] ResearchGate (Legal Regime Study):** `https://www.researchgate.net/publication/375118090_Legal_Regime_of_Cryptocurrency_in_Bangladesh_A_Study_on_Bitcoin`
*   **[4] Mahbub & Company (Legal Analysis):** `https://mahbub-company.com/is-bitcoin-legal-in-bangladesh/`
*   **[5] Freeman Law (Legal Overview):** `https://freemanlaw.com/bangladesh-cryptocurrency-laws/`
*   **[6] The Daily Star (Legal Analysis):** `https://www.thedailystar.net/law-our-rights/news/legality-bitcoin-bangladesh-bank-1703977`
*   **[7] The Business Standard (BB Order to Banks):** `https://www.tbsnews.net/economy/banking/bb-orders-tighten-monitoring-stop-cryptocurrency-transactions-513434`
*   **[8] The Business Standard (BB Circular - Refrain from Dealing):** `https://www.tbsnews.net/economy/banking/refrain-dealing-virtual-assets-currencies-bb-462110`
*   **[9] AInvest (Current Status Overview 2025):** `https://www.ainvest.com/news/bangladeshs-strict-crypto-stance-persists-despite-underground-adoption-2653100853/`
*   **[10] CEX.IO (Trading Info/Status Summary):** `https://cex.io/learn/countries/is-crypto-legal-in-bangladesh`
*   **[11] Cryptocurrency Regulation Tracker (General Status):** `https://cryptoregulationtracker.com/` (Note: Provides a simplified "Banned" status, reflecting common international interpretation)
*   **[12] The Daily Star (BB Reiterates Stance):** `https://www.thedailystar.net/business/news/cryptocurrency-trading-not-allowed-all-bangladesh-bank-2140011`
*   **[14] The Financial Express (Underground Market):** `https://thefinancialexpress.com.bd/views/reviews/cryptocurrencies-in-bangladesh-a-growing-shadow-economy-1704491446`
*   **[15] DailyForex (Trading Legality Analysis 2025):** `https://www.dailyforex.com/forex-articles/2023/09/is-bitcoin-legal-in-bangladesh/199890` (Describes it as a grey area)
*   **[19] Bangla news (Future Outlook 2025):** `https://banglanews.com/news/the-future-of-cryptocurrency-in-bangladesh-trends-and-outlook-for-2025-1648200415.html` (Notes discouraged status, regulatory gray zone)

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**End of Report**