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Bangladesh

Retail_Trading_Status

Banned Unknown
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Status Changed

Previous status: Gray-Zone

The primary difference between the two analyses is the "Identified Status" of retail cryptocurrency trading in Bangladesh: the previous analysis concluded "Gray-Zone," while the new analysis concludes "Banned." This shift in status, despite both reports being dated in 2025 and referencing largely similar source material and regulatory actions, stems primarily from a difference in analytical interpretation, emphasis, and the definition of what constitutes a "ban" in a complex regulatory environment. Justification for the differences: 1. **Interpretation of "Ban" and Emphasis on Practical Effect vs. Legal Specificity:** * The **previous analysis** adopted a more nuanced interpretation. It emphasized that while transactions are effectively prohibited through the application of existing laws (FERA, MLPA, ATA) and strong central bank directives, there isn't a specific law explicitly criminalizing the *mere possession* of cryptocurrencies. The Bangladesh Bank's clarification to the CID, stating that ownership itself might not be a crime unless linked to violations of other acts, was a key factor supporting the "Gray-Zone" status. This approach focused on the lack of a singular, explicit "anti-crypto" law and the resulting ambiguity. * The **new analysis** takes a more pragmatic view, focusing on the *de facto* outcome of the regulatory environment. It argues that the consistent and strong warnings from Bangladesh Bank, the explicit prohibition on financial institutions facilitating any crypto transactions, and the clear threat of severe penalties under existing financial laws for engaging in such transactions effectively constitute a ban on retail trading. While acknowledging the nuance about mere possession, it gives more weight to the fact that any practical use (buying, selling, transacting) is heavily restricted and carries significant legal risk, making the activity effectively banned for individuals. 2. **Weighting of Official Stance and Enforcement:** * The **previous analysis** highlighted the "ambiguity" and the "gray area" by balancing the prohibitive stance on transactions with the lack of explicit criminalization of passive holding. It pointed to the underground market as evidence of activity occurring despite restrictions, further supporting the "gray" nature. * The **new analysis** places greater emphasis on the prohibitive directives from the Bangladesh Bank and the consistent application of existing laws to deter cryptocurrency activities. It interprets the central bank's stance as creating an environment where, for all practical purposes related to trading, the activity is not permitted and is subject to legal action. The existence of an underground market is acknowledged but framed as activity occurring *despite* a de facto ban, rather than evidence of a permissible gray zone. 3. **Focus of the Narrative:** * The **previous analysis** dedicated more narrative space to exploring the legal arguments about whether cryptocurrencies fit definitions under FERA and the precise legal standing of possession versus transaction. * The **new analysis**, while acknowledging these points, more directly concludes that the sum of regulatory actions and warnings leads to an effective ban on the *activity* of trading. It streamlines the argument towards the prohibitive nature of the environment for retail users wanting to buy, sell, or use cryptocurrencies. 4. **Influence of Summarizing Sources:** * The new analysis includes a source (KYC Hub) that explicitly states Bangladesh "bans all cryptocurrency usage, trade, and possession." While the previous report also cited a tracker with a "Banned" status, it qualified this as a "simplified common international interpretation" while its own detailed analysis led to "Gray-Zone." The new analysis appears to align more closely with the direct interpretation of such summarizing assessments, reflecting the overall prohibitive impact. In summary, the new analysis ("Banned") interprets the existing regulatory framework and central bank actions as creating an environment where retail cryptocurrency trading is practically and legally untenable for individuals, even without a single piece of legislation explicitly titled "Cryptocurrency Prohibition Act." It prioritizes the functional prohibition on trading activities. The previous analysis ("Gray-Zone") focused more on the legal technicalities, specifically the lack of an explicit law against mere possession and the nuanced clarifications from the central bank, which created an ambiguous situation rather than an outright, clearly legislated ban on all aspects. The difference is a shift in emphasis from the nuanced legal technicalities to the overarching practical and prohibitive impact of the regulatory regime on retail trading.

Analysis ID
#270
Version
Archived
Created
2025-06-26 09:08
Workflow Stage
Initial Research

Executive Summary

Retail cryptocurrency trading is effectively banned in Bangladesh, although there is no single law explicitly outlawing it. The Bangladesh Bank has issued multiple warnings against cryptocurrency use, citing potential violations of the Foreign Exchange Regulation Act, Money Laundering Prevention Act, and Anti Terrorism Act. Financial institutions are prohibited from facilitating cryptocurrency transactions. Despite the ban, an underground market exists, with individuals trading through online platforms and P2P networks, highlighting a discrepancy between the official stance and actual practice.

Key Pillars

  • Primary regulator: Bangladesh Bank, which does not recognize cryptocurrency as legal tender.
  • Core Compliance: Existing financial regulations related to foreign exchange and anti-money laundering are applied to restrict cryptocurrency activities.
  • Licensing/Registration: There are no specific KYC/AML requirements imposed on cryptocurrency platforms because the activity itself is not sanctioned, and no licensing or registration is available.

Landmark Laws

  • Foreign Exchange Regulation Act, 1947: Cited in warnings against cryptocurrency transactions.
  • Money Laundering Prevention Act, 2012: Cited in warnings against cryptocurrency transactions.
  • Anti Terrorism Act, 2009: Cited in warnings against cryptocurrency transactions in the December 24, 2017, 'Cautionary Notice'.

Considerations

  • Legal classification: Cryptocurrency is not recognized as legal tender in Bangladesh.
  • Tax treatment: There are no specific tax laws for cryptocurrency transactions, as they are considered to fall outside the recognized financial system.
  • Risks/Concerns: Concerns about money laundering, terrorist financing, and overall financial instability drive the prohibitive stance.
  • Operational Challenges: There are currency controls that impact cryptocurrency transactions.

Notes

  • In 2014, Bangladesh Bank first cautioned against Bitcoin, warning of violations of the Foreign Exchange Regulation Act, 1947, and the Money Laundering Prevention Act, 2012. A "Cautionary Notice" on December 24, 2017, reiterated this stance and added the Anti Terrorism Act, 2009.
  • While the government has shown interest in blockchain technology through its "National Blockchain Strategy" published in 2020 and has explored a Central Bank Digital Currency (CBDC), this does not extend to public cryptocurrencies.
  • The Bangladesh Bank clarified to the Criminal Investigation Department (CID) that owning or transacting in crypto is not, by itself, a punishable offense but can be prosecuted if linked to money laundering, terrorist financing, or foreign currency violations.
  • Individuals are reportedly engaging in cryptocurrency trading through online platforms and peer-to-peer (P2P) networks, using mobile financial services like bKash or Nagad to fund accounts on exchanges like Binance or Coinbase.

Detailed Explanation

Retail cryptocurrency trading is effectively banned for individual citizens and residents in Bangladesh. While there is no specific law explicitly outlawing owning or trading cryptocurrencies in all circumstances, the Bangladesh Bank, along with other governmental warnings, has created a prohibitive environment. Existing financial regulations, particularly those related to foreign exchange and anti-money laundering, are consistently interpreted and applied to restrict cryptocurrency activities.

Bangladesh Bank issued a warning in 2014 cautioning against Bitcoin and stating that transacting in such virtual currencies could lead to violations of the Foreign Exchange Regulation Act, 1947, and the Money Laundering Prevention Act, 2012. This stance was reiterated and strengthened in a "Cautionary Notice" on December 24, 2017, which additionally cited the Anti Terrorism Act, 2009, as a law that could be violated by cryptocurrency transactions. The notice urged citizens to refrain from performing, assisting, and advertising all kinds of transactions through virtual currencies to avoid financial and legal risks. Bank officials warned that anyone found guilty of transacting in cryptocurrency could face up to 12 years in jail under anti-money laundering laws.

Financial institutions in Bangladesh are not permitted to facilitate cryptocurrency transactions. The Bangladesh Bank has clearly stated that cryptocurrencies are not legal tender in the country and are not authorized by any regulatory agency. Transactions involving cryptocurrencies are not approved by any central payment system, and the central bank has warned that individuals can be financially harmed and face legal consequences.

Despite these strong warnings and the de facto ban, there is evidence of a thriving underground market for cryptocurrencies in Bangladesh. Individuals reportedly engage in cryptocurrency trading through various online platforms and peer-to-peer (P2P) networks, often using mobile financial services like bKash or Nagad to fund their accounts on exchanges like Binance or Coinbase, which are neither explicitly banned nor legally acknowledged. This highlights a discrepancy between the official stance and actual practice, though such activities remain legally precarious.

In a somewhat nuanced communication, the Bangladesh Bank clarified to the Criminal Investigation Department (CID) that while owning or transacting in crypto is not, by itself, a punishable offense, such activities can be prosecuted if linked to money laundering, terrorist financing, or foreign currency violations. However, the overarching message from the authorities remains strongly prohibitive. The Bangladesh Bank continues to state that it does not recognize cryptocurrency as legal currency and has not allowed transactions or reserves in such private currencies.

While the government has shown interest in blockchain technology through its "National Blockchain Strategy" published in 2020 and the Bangladesh Bank has explored the concept of a Central Bank Digital Currency (CBDC), this interest does not extend to public cryptocurrencies. The official stance against retail cryptocurrency trading remains firm due to concerns about money laundering, terrorist financing, and overall financial instability. There are no specific KYC/AML requirements imposed on cryptocurrency platforms by Bangladeshi regulators because the activity itself is not sanctioned. Similarly, there are no specific tax laws for cryptocurrency transactions, as they are considered to fall outside the recognized financial system.

Therefore, despite some ambiguity in whether mere possession is a crime, the act of trading (buying and selling) and using cryptocurrencies for transactions is effectively banned due to the existing legal framework and the explicit warnings from the central bank.

Summary Points

Okay, here's a bullet-point summary of the Retail_Trading_Status regulatory analysis report for Bangladesh, designed for quick comprehension:

Retail Cryptocurrency Trading Status in Bangladesh (as of 2025-06-26)

I. Overall Regulatory Status:

  • Effectively Banned: Retail cryptocurrency trading (buying, selling, and holding) is effectively banned for individual citizens and residents.
  • No Explicit Law, but Prohibitive Environment: No single law explicitly outlaws cryptocurrency ownership or trading in all circumstances, but the regulatory environment is prohibitive.

II. Key Regulatory Bodies and Their Roles:

  • Bangladesh Bank (Central Bank):
    • Primary regulatory body issuing warnings and restrictions.
    • States cryptocurrencies are not legal tender.
    • Does not authorize cryptocurrency transactions.
    • Warns of financial harm and legal consequences.
    • Clarified that crypto activities can be prosecuted if linked to money laundering, terrorist financing, or foreign currency violations.
  • Other Governmental Bodies: Support Bangladesh Bank's stance through enforcement of existing laws.

III. Important Legislation and Regulations:

  • Foreign Exchange Regulation Act, 1947: Used to restrict cryptocurrency transactions.
  • Money Laundering Prevention Act, 2012: Used to restrict cryptocurrency transactions.
  • Anti Terrorism Act, 2009: Cited as a law that could be violated by cryptocurrency transactions.

IV. Requirements for Compliance:

  • No Official KYC/AML Requirements: Because cryptocurrency trading is not sanctioned, there are no specific KYC/AML requirements imposed on platforms by Bangladeshi regulators.
  • De Facto Compliance: Individuals are expected to refrain from all cryptocurrency transactions.

V. Notable Restrictions and Limitations:

  • Financial Institutions Prohibited: Financial institutions are not permitted to facilitate cryptocurrency transactions.
  • Not Legal Tender: Cryptocurrencies are not recognized as legal tender.
  • No Central Payment System Approval: Transactions are not approved by any central payment system.
  • Risk of Prosecution: Individuals engaging in cryptocurrency transactions risk prosecution under existing laws (Foreign Exchange, Anti-Money Laundering, Anti-Terrorism).
  • Underground Market: Despite the ban, an underground market exists, but participation remains legally precarious.

VI. Recent Developments and Changes:

  • Consistent Warnings: Bangladesh Bank has consistently issued warnings against cryptocurrency use since 2014.
  • Government Interest in Blockchain: The government has shown interest in blockchain technology (National Blockchain Strategy, 2020) and a potential CBDC, but this does not extend to public cryptocurrencies.
  • No Change in Stance: The official stance against retail cryptocurrency trading remains firm due to concerns about money laundering, terrorist financing, and financial instability.
  • No Specific Tax Laws: There are no specific tax laws for cryptocurrency transactions, as they are considered outside the recognized financial system.

Full Analysis Report

Report on the Current Status of Retail Cryptocurrency Trading in Bangladesh

Date: 2025-06-26

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).

1. Current Status:

Banned

2. Detailed Narrative Explanation:

Retail cryptocurrency trading (buying, selling, and holding) is effectively banned for individual citizens and residents in Bangladesh. While there isn't a single, specific law that explicitly outlaws the act of owning or trading cryptocurrencies in all circumstances, the country's central bank, Bangladesh Bank, along with other governmental warnings, has created a prohibitive environment. Existing financial regulations, particularly those related to foreign exchange and anti-money laundering, are consistently interpreted and applied to restrict cryptocurrency activities.

Historically, Bangladesh Bank has issued multiple warnings against the use of cryptocurrencies. The first significant warning came in 2014, cautioning against Bitcoin and stating that transacting in such virtual currencies could lead to violations of the Foreign Exchange Regulation Act, 1947, and the Money Laundering Prevention Act, 2012. This stance was reiterated and strengthened in a "Cautionary Notice" on December 24, 2017, which additionally cited the Anti Terrorism Act, 2009, as a law that could be violated by cryptocurrency transactions. The notice urged citizens to refrain from performing, assisting, and advertising all kinds of transactions through virtual currencies to avoid financial and legal risks. Bank officials even warned that anyone found guilty of transacting in cryptocurrency could face up to 12 years in jail under anti-money laundering laws.

Financial institutions in Bangladesh are not permitted to facilitate cryptocurrency transactions. The Bangladesh Bank has clearly stated that cryptocurrencies are not legal tender in the country and are not authorized by any regulatory agency. Transactions involving cryptocurrencies are not approved by any central payment system, and the central bank has warned that individuals can be financially harmed and face legal consequences.

Despite these strong warnings and the de facto ban, there is evidence of a thriving underground market for cryptocurrencies in Bangladesh. Individuals reportedly engage in cryptocurrency trading through various online platforms and peer-to-peer (P2P) networks, often using mobile financial services like bKash or Nagad to fund their accounts on exchanges like Binance or Coinbase, which are neither explicitly banned nor legally acknowledged. This highlights a discrepancy between the official stance and actual practice, though such activities remain legally precarious.

In a somewhat nuanced communication, the Bangladesh Bank reportedly clarified to the Criminal Investigation Department (CID) that while owning or transacting in crypto is not, by itself, a punishable offense, such activities can be prosecuted if linked to money laundering, terrorist financing, or foreign currency violations. However, the overarching message from the authorities remains strongly prohibitive. The Bangladesh Bank continues to state that it does not recognize cryptocurrency as legal currency and has not allowed transactions or reserves in such private currencies.

While the government has shown interest in blockchain technology through its "National Blockchain Strategy" published in 2020 and the Bangladesh Bank has explored the concept of a Central Bank Digital Currency (CBDC), this interest does not extend to public cryptocurrencies. The official stance against retail cryptocurrency trading remains firm due to concerns about money laundering, terrorist financing, and overall financial instability. There are no specific KYC/AML requirements imposed on cryptocurrency platforms by Bangladeshi regulators because the activity itself is not sanctioned. Similarly, there are no specific tax laws for cryptocurrency transactions, as they are considered to fall outside the recognized financial system.

Therefore, despite some ambiguity in whether mere possession is a crime, the act of trading (buying and selling) and using cryptocurrencies for transactions is effectively banned due to the existing legal framework and the explicit warnings from the central bank.

3. Specific, Relevant Text Excerpts:

  • Bangladesh Bank (2014, reiterated 2017): "In September 2014, Bangladesh Bank said that 'anybody caught using the virtual currency could be jailed under the country's strict anti-money laundering laws'." "The Central Bank expressly disapproved any transaction of cryptocurrencies by stating that these virtual currencies were not legal tender issued by any country and it does not depend on and is not approved by a central payment system, as such, people may be financially harmed by it. The recent global popularity of bitcoin and other cryptocurrencies pushed Bangladesh Bank to issue another “Cautionary Notice” on its website on 24th December, 2017. While the recent notice reiterates the laws mentioned in the first notice, it added the Anti Terrorism Act 2009 as another law that use of bitcoin could violate."
  • Bangladesh Bank (2017 Notice Summary by Freeman Law): "[T]ransaction [sic] with this currency may cause a violation of the existing money laundering and terrorist financing regulations.” The notice states that bitcoin transactions “are not authorized by the Bangladesh Bank or any regulatory agencies, and do not conform with the provisions under the Foreign Exchange Regulation Act, 1947; Anti-Terrorism Act, 2009; and the Money Laundering Prevention Act, 2012.”
  • The Financial Express (quoting Bangladesh Bank, 2021/2022): "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... 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." "Bangladesh Bank spokesperson and executive director Md. Serajul Islam said the central bank's position didn't change at all. 'We don't recognise cryptocurrency as legal currency,' he told FE."
  • The Business Standard (May 2024): "The Bangladesh Bank declared in 2017 that cryptocurrencies like Bitcoin are not legal tender. There is no specific law banning their use, but existing legislation on foreign exchange and money laundering makes trading in crypto a risky affair." "These personal stories reveal Bitcoin's strange status in Bangladesh—banned in practice, yet wildly popular."
  • AInvest (April 2025): "Bangladesh maintains a strict stance on cryptocurrency, with the Bangladesh Bank issuing multiple warnings since 2014 regarding money laundering, terrorist financing, and financial instability. 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." "Running such platforms is prosecuted under existing finance and anti-money laundering laws, making crypto exchanges, exchanges, and brokers illegal."
  • KYC Hub (2025): "Asian countries consider Bangladesh to have among the strictest cryptocurrency regulations. Bangladesh's central bank, the Bangladesh Bank, clarified that it bans all cryptocurrency usage, trade, and possession due to risks of money laundering and financial system instability. The country conducts legal proceedings against offenders who violate its anti-money laundering laws."

4. Direct, Accessible URL Links to Specific Sources:

Web Sources (13)

Sources discovered via web search grounding

Search queries used (6)
  • current status of retail cryptocurrency trading in Bangladesh
  • Bangladesh Bank cryptocurrency regulations
  • Bangladesh Securities and Exchange Commission cryptocurrency rules
  • AML/CFT laws for cryptocurrency in Bangladesh
  • legal status of buying and selling cryptocurrency in Bangladesh for individuals
  • official statements on cryptocurrency by Bangladesh government
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