Back to Analyses

Bangladesh

Retail_Trading_Status

Gray-Zone Unknown
Edit

Status Changed

Previous status: Banned

The change in the assessed status of retail cryptocurrency trading in Bangladesh from "Banned" in the Previous Analysis to "Gray-Zone" in the New Analysis stems from a more nuanced interpretation of the available regulatory information and a greater emphasis on specific clarifications and circulars issued by the Bangladesh Bank. Justification for the differences: 1. Interpretation of "Ban": The Previous Analysis concluded an "effective ban" based on strong warnings from the Bangladesh Bank and the consistent application of existing laws (Foreign Exchange Regulation Act 1947, Money Laundering Prevention Act 2012, Anti Terrorism Act 2009) to restrict crypto activities. While acknowledging no single specific law outlaws crypto, it emphasized the prohibitive environment created. The New Analysis, however, interprets this lack of a specific, direct law criminalizing ownership or trading *per se* as a key characteristic of a "Gray-Zone." It highlights that while activities are not authorized and can lead to prosecution under existing financial laws, the act of simply owning or trading crypto isn't automatically a crime in itself. 2. Emphasis on Bangladesh Bank's Clarification to CID: The New Analysis gives more significant weight to the reported clarification from the Bangladesh Bank to the Criminal Investigation Department (CID). Multiple sources in the New Analysis (The Financial Express, The Business Standard, Dhaka Tribune) indicate that the central bank stated that owning or transacting in cryptocurrency is not inherently a crime unless linked to illicit activities like money laundering, terrorist financing, or foreign exchange violations. The Previous Analysis mentioned this as a "somewhat nuanced communication" but still concluded an effective ban. The New Analysis sees this nuance as central to defining the situation as a "Gray-Zone," where legality is conditional. 3. Inclusion and Interpretation of FE Circular No. 24 (2022): The New Analysis specifically introduces and analyzes Bangladesh Bank's FE Circular No. 24, dated September 15, 2022. This circular reiterates that virtual currencies are not recognized under the Foreign Exchange Regulation Act (FERA), 1947, and that transactions for obtaining virtual assets are "not permitted." It also directs individuals and entities to "refrain from dealing" in virtual assets. The New Analysis interprets "not permitted" and "refrain from" under existing foreign exchange laws as reinforcing a restrictive stance and strong discouragement, but distinct from an outright criminal ban on possession or trading as a standalone offense. This supports the "Gray-Zone" by showing restriction through existing frameworks rather than a new, specific criminal prohibition. 4. Distinction between "Not Legal Tender/Not Authorized" and "Illegal/Criminal": The New Analysis more clearly distinguishes between cryptocurrencies not being legal tender or authorized by the Bangladesh Bank, and the act of trading/holding them being an explicit crime. While the Previous Analysis notes this, its overall conclusion leans towards an effective ban. The New Analysis argues that because the illegality is primarily tied to breaches of other existing financial laws (FERA, AML), rather than a specific crypto prohibition, the situation is more accurately described as a "Gray-Zone." Individuals operate in an area of legal ambiguity and risk, rather than facing a clear-cut ban on the activity itself. 5. Acknowledging Ongoing Unofficial Activity: Both analyses note the thriving underground market. The New Analysis uses this persistent unofficial trading, despite the warnings and potential legal repercussions, as further evidence of a "Gray-Zone." If it were a straightforward, stringently enforced ban with clear criminal penalties for mere possession or trading, such widespread activity might be less prevalent or more deeply hidden. The ambiguity allows this "gray market" to exist. In summary, the New Analysis shifts the status to "Gray-Zone" by placing greater emphasis on the absence of a specific law criminalizing crypto, the nuanced communications from the Bangladesh Bank (especially to the CID), and the specific wording of regulatory circulars like FE Circular No. 24. It concludes that while retail crypto trading is strongly discouraged, not officially permitted, and carries significant legal risks under existing financial laws, it does not meet the threshold of an explicit, outright ban where the act of trading or possession itself is a standalone crime, irrespective of other illicit activities. This creates an environment of legal ambiguity, which is the hallmark of a "Gray-Zone."

Analysis ID
#339
Version
Latest
Created
2025-06-26 12:45
Workflow Stage
Live

Executive Summary

Retail cryptocurrency trading in Bangladesh exists in a "Gray-Zone." The Bangladesh Bank has issued strong warnings against cryptocurrency trading, though no explicit law bans it. Transactions may violate the Foreign Exchange Regulation Act (1947), Anti Money Laundering Act (2012), and Anti-Terrorism Act (2009). Despite the official stance, cryptocurrency trading persists through online platforms and P2P networks.

Key Pillars

The primary regulator is the Bangladesh Bank, which discourages cryptocurrency use due to concerns about money laundering and financial instability. Core compliance requirements involve adherence to existing financial regulations, including the Foreign Exchange Regulation Act, the Anti-Money Laundering Act, and the Anti-Terrorism Act. There are no specific licensing or registration requirements for cryptocurrency platforms since they are not officially recognized.

Landmark Laws

Foreign Exchange Regulation Act (FERA), 1947: This act is cited as a key legal framework that virtual currency transactions may contravene. FE Circular No. 24, issued September 15, 2022, reinforces that virtual currencies are not recognized under FERA, and transactions related to virtual assets are not permitted.
Anti Money Laundering (AML) Act, 2012: Cryptocurrency transactions may be prosecuted under this act if linked to money laundering activities.
Anti-Terrorism Act, 2009: Cryptocurrency transactions may be prosecuted under this act if linked to terrorist financing.

Considerations

Cryptocurrencies are not recognized as legal tender in Bangladesh. The Bangladesh Bank has consistently warned about the risks of money laundering, terrorist financing, and financial instability associated with cryptocurrencies. Operationally, there are limitations on dealing in virtual assets, and the government has reportedly taken steps to limit access to some cryptocurrency trading websites. Despite the warnings, significant cryptocurrency trading occurs through online platforms and P2P networks.

Notes

In 2014, the Bangladesh Bank issued its first warning regarding cryptocurrencies, and subsequent notices have reiterated this stance. In 2017, a cautionary notice explicitly stated that virtual currencies are not legal tender and are not approved. In 2021, the Bangladesh Bank reportedly clarified to the CID that cryptocurrency ownership is not inherently a crime unless linked to illicit activities. The government has expressed interest in blockchain technology through its National Blockchain Strategy and is exploring a Central Bank Digital Currency (CBDC). The 'DailyForex' states that trading is legal so long as Bangladeshi traders use a fiat currency to deposit and withdraw.

Detailed Explanation

The retail cryptocurrency trading status in Bangladesh is classified as a "Gray-Zone." While no specific law explicitly bans individual ownership or trading, the Bangladesh Bank and the government strongly discourage it, citing concerns of money laundering, terrorist financing, and financial instability. Transactions can potentially violate the Foreign Exchange Regulation Act (FERA) of 1947, the Anti-Money Laundering (AML) Act of 2012, and the Anti-Terrorism Act of 2009. The Bangladesh Bank first warned against cryptocurrencies in 2014 and reiterated this stance in subsequent notices, with a 2017 notice stating that virtual currencies are not legal tender. FE Circular No. 24, dated September 15, 2022, specifies that virtual currencies are not recognized under FERA, prohibiting transactions involving virtual assets.

Despite these warnings, cryptocurrency trading continues through online platforms and P2P networks. In 2021, the Bangladesh Bank reportedly clarified to the Criminal Investigation Department (CID) that cryptocurrency ownership isn't inherently a crime unless linked to illicit activities. However, authorities continue to discourage such activities due to legal risks. The Financial Express quoted a Bangladesh Bank letter to CID saying that "Even if the ownership, preservation or transaction of cryptocurrency is not recognised, it does not appear to be a crime" but added that transactions can be listed as crimes under the FERA, Anti-Terrorism Act, and Prevention of Money Laundering Act. Mahbub & Company stated that the regulator has fallen short of banning or criminalizing use of Bitcoin except in cases where it is used to commit an existing offence under the Foreign Exchange Regulation Act, Anti-Money Laundering Act and the Anti-Terrorism Act.

There are no specific KYC/AML requirements imposed on cryptocurrency platforms by Bangladeshi regulators because these platforms are not officially licensed. However, international platforms used by Bangladeshi traders may enforce their own KYC rules. The government has reportedly limited access to some cryptocurrency trading websites. AInvest noted the challenging environment for investors due to the absence of an official ban coupled with regulatory discouragement. The Business Standard reported the Bangladesh Bank declared in 2017 that cryptocurrencies are not legal tender but that existing legislation on foreign exchange and money laundering makes trading in crypto risky.

While the government is exploring blockchain technology and a Central Bank Digital Currency (CBDC), this hasn't led to a more permissive environment for private cryptocurrencies. The Dhaka Tribune cited a 2021 Bangladesh Bank letter to CID stating that owning cryptocurrencies is not a criminal offence unless it involves money laundering or terror financing. Coinfomania notes that despite the lack of an official ban, the country is strongly against its use. The legal status of crypto ownership remains unclear in 2025 because Bangladesh Bank says crypto lacks official recognition.

Summary Points

Okay, here's the regulatory analysis report on Retail_Trading_Status in Bangladesh, converted into a clear, well-structured bullet point format:

Retail Cryptocurrency Trading in Bangladesh: Regulatory Status (2025-06-26)

I. Overall Regulatory Status: Gray Zone

  • Retail cryptocurrency trading is neither explicitly legal nor explicitly illegal.
  • There is no specific law banning the ownership or trading of cryptocurrencies.
  • However, regulatory bodies strongly discourage it, citing risks and potential violations of existing financial laws.

II. Key Regulatory Bodies and Their Roles

  • Bangladesh Bank (Central Bank):
    • Primary regulatory body issuing warnings and guidance.
    • Maintains that cryptocurrency activities are not authorized.
    • States virtual currencies are not legal tender and not approved by any central payment system.
    • Clarified to CID that ownership/transactions are not inherently criminal unless linked to illicit activities.
  • Criminal Investigation Department (CID):
    • Enforces existing laws related to financial crimes.
    • Receives guidance from the Bangladesh Bank regarding cryptocurrency-related investigations.

III. Important Legislation and Regulations

  • Foreign Exchange Regulation Act (FERA), 1947:
    • Cryptocurrency transactions may fall foul of this act.
    • Bangladesh Bank Circular No. 24 (Sept 15, 2022) states virtual currencies are not recognized under FERA, and transactions to obtain virtual assets are not permitted.
  • Anti Money Laundering (AML) Act, 2012:
    • Cryptocurrency activities can be prosecuted if linked to money laundering.
  • Anti-Terrorism Act, 2009:
    • Cryptocurrency activities can be prosecuted if linked to terrorist financing.

IV. Requirements for Compliance (Indirect)

  • No specific KYC/AML requirements imposed on cryptocurrency platforms by Bangladeshi regulators because they are not officially recognized.
  • International platforms used by Bangladeshi traders may enforce their own KYC rules.
  • Compliance with existing financial laws (FERA, AML, Anti-Terrorism Act) is crucial to avoid prosecution if engaging in crypto activities.

V. Notable Restrictions and Limitations

  • Strong Warnings: Bangladesh Bank consistently cautions the public about the risks.
  • Lack of Legal Recognition: Cryptocurrencies are not legal tender and not approved by any central payment system.
  • Potential Legal Risks: Transactions can potentially violate FERA, AML, and Anti-Terrorism Act if linked to illicit activities.
  • Restrictions on Transactions: Bangladesh Bank prohibits transactions made in/from/to Bangladesh for obtaining virtual assets.
  • Discouragement of Facilitation: All individuals and entities operating in Bangladesh should refrain from dealing in virtual assets and facilitating such transactions.
  • Limited Access: Government has reportedly taken steps to limit access to some cryptocurrency trading websites.

VI. Recent Developments and Changes

  • Bangladesh Bank Clarification (2021): While not recognizing cryptocurrency, the Bangladesh Bank indicated to the CID that ownership/transactions are not inherently a crime unless linked to illicit activities.
  • Bangladesh Bank Circular No. 24 (2022): Reaffirmed the restrictive stance, stating virtual currencies are not recognized under FERA and prohibiting related transactions.
  • National Blockchain Strategy: Government is exploring blockchain technology, but this has not translated into a more permissive environment for private cryptocurrencies.
  • Central Bank Digital Currency (CBDC) Exploration: The government is exploring a CBDC, but this does not impact the regulatory status of private cryptocurrencies.
  • High Crypto Adoption: Despite the regulatory stance, significant cryptocurrency trading occurs through online platforms and P2P networks. Bangladesh ranks relatively high in global crypto adoption indices.

VII. Important Considerations

  • The "Gray-Zone" status creates ambiguity and uncertainty for individuals and businesses.
  • The potential application of existing financial crime laws to crypto-related activities poses a significant risk.
  • The government's interest in blockchain technology and a CBDC does not necessarily indicate a future shift towards legalizing private cryptocurrencies.
  • The information from DailyForex about trading being legal with fiat currency seems to contradict the general understanding from other sources and official circulars, highlighting the "grayness".

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. Identified Current 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 that outright bans the ownership or trading of cryptocurrencies for individuals, the government and its regulatory bodies, primarily the Bangladesh Bank (the central bank), have issued strong warnings against it and maintain that such activities are not authorized. Transactions involving cryptocurrencies can potentially fall foul of existing financial regulations, particularly the Foreign Exchange Regulation Act (FERA), 1947, the Anti Money Laundering (AML) Act, 2012, and the Anti-Terrorism Act, 2009.

Historically, the Bangladesh Bank has consistently cautioned the public about the risks associated with cryptocurrencies, citing concerns about money laundering, terrorist financing, and financial instability. The first warning was issued in 2014, and subsequent notices have reiterated this stance. In 2017, a cautionary notice explicitly stated that virtual currencies are not legal tender and are not approved by any central payment system, advising citizens to refrain from all kinds of transactions involving them.

Despite these warnings and the lack of legal recognition, a significant amount of cryptocurrency trading reportedly occurs in Bangladesh through various online platforms and peer-to-peer (P2P) networks. This underground adoption highlights the dichotomy between the official stance and actual practice. Some reports even indicate a high ranking for Bangladesh in global crypto adoption indices.

A key nuance in the "Gray-Zone" status is a clarification reportedly made by the Bangladesh Bank to the Criminal Investigation Department (CID) in 2021. According to some sources, the central bank indicated that while cryptocurrency ownership or transactions are not recognized, they do not inherently constitute a crime unless linked to illicit activities like money laundering or terrorist financing. However, the overarching message from the authorities remains one of strong discouragement and warning of legal risks under existing financial laws.

The Bangladesh Bank, in a circular dated September 15, 2022 (FE Circular No. 24), reiterated that virtual currencies are not recognized under the FERA, 1947, and any transactions made in/from/to Bangladesh for obtaining virtual assets or currencies are not permitted. It also stated that all individuals and entities operating in Bangladesh should refrain from dealing in virtual assets and facilitating such transactions. This circular reinforces the restrictive stance.

There are no specific KYC/AML requirements imposed on cryptocurrency platforms by Bangladeshi regulators because these platforms are not officially licensed or recognized. However, international platforms used by Bangladeshi traders may enforce their own KYC rules. The government has also reportedly taken steps to limit access to some cryptocurrency trading websites.

While the government has expressed interest in blockchain technology through its National Blockchain Strategy and is exploring a Central Bank Digital Currency (CBDC), this has not translated into a more permissive environment for private cryptocurrencies. The legal and regulatory landscape remains characterized by a lack of explicit legal framework for cryptocurrencies, strong warnings from regulatory bodies, and the potential application of existing financial crime laws to crypto-related activities. This ambiguity and the ongoing unofficial trading activity firmly place the retail trading status in a Gray-Zone.

3. Specific, Relevant Text Excerpts:

  • The Financial Express (citing a Bangladesh Bank letter to CID): "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."
  • Mahbub & Company (Legal Firm): "However, from the two cautionary notices published by the central bank, it is evident that the regulator has fallen short of “banning” or “criminalizing” the use of bitcoin except in cases where it is used to commit an existing offence under the Foreign Exchange Regulation Act, Anti-Money Laundering Act and the Anti-Terrorism Act."
  • AInvest (Financial News): "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. This stance has created a challenging environment for investors, businesses, and users who are interested in digital finance." "Running such platforms is prosecuted under existing finance and anti-money laundering laws, making crypto exchanges, exchanges, and brokers illegal."
  • The Business Standard (News Outlet): "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. A few years back, Bangladesh Bank told the Criminal Investigation Department (CID) that owning or transacting in crypto is not, by itself, a punishable offence. However, if these activities are linked to money laundering, terrorist financing, or foreign currency violations, they can be prosecuted."
  • Bangladesh Bank FE Circular No. 24 (September 15, 2022): "The definition of “currency” given in section 2(b)(i) of the Foreign Exchange Regulation (FER) Act, 1947 does not recognize virtual currencies... Any transactions made in/from/to Bangladesh for obtaining virtual assets (as defined in paragraph 3) or its subset- virtual currencies, are not permitted by Bangladesh Bank." "Therefore, all individuals/entities/institutions operating in Bangladesh shall refrain from dealing in virtual assets, virtual currencies and providing any kind of facilitation in favor of doing business, activities, and operations associated with exchange/transfer/trading of virtual assets or virtual currencies."
  • DailyForex (Financial News, September 2024): "Bitcoin remains illegal as a tender. Bangladesh has strict rules, with harsh punishments for anyone who uses Bitcoin in that capacity. Bitcoin trading is legal so long as Bangladeshi traders use a fiat currency to deposit and withdraw..." (Note: This statement about trading being legal with fiat currency seems to contradict the general understanding from other sources and official circulars, highlighting the "grayness" but is included for completeness of available perspectives).
  • Dhaka Tribune (citing a Bangladesh Bank letter to CID, July 2021): "Owning cryptocurrencies or carrying out virtual transactions and trade through them is not a criminal offence, the Bangladesh Bank recently said in a letter to the Criminal Investigation Department (CID). The Foreign Monetary Policy Division of the central bank wrote in the letter that cryptocurrency transactions or trade should be deemed as crimes if they involve money laundering or terror financing, a CID source has confirmed."
  • Coinfomania (Crypto News, April 2025): "While there is no official law stating anything against crypto, the country is strongly against the use of it." "The legal status of crypto ownership remains unclear in 2025 because Bangladesh Bank says crypto lacks official recognition."

4. Direct, Accessible URL Links to Specific Sources:

Web Sources (19)

Sources discovered via web search grounding

Search queries used (8)
  • Retail cryptocurrency trading status Bangladesh
  • Bangladesh Bank cryptocurrency regulations
  • Bangladesh Securities and Exchange Commission cryptocurrency
  • Legality of Bitcoin in Bangladesh 2024 2025
  • Cryptocurrency ban Bangladesh
  • Foreign Exchange Regulation Act 1947 Bangladesh cryptocurrency
  • Anti Money Laundering Act 2012 Bangladesh cryptocurrency
  • Digital Security Act 2018 Bangladesh cryptocurrency
Source

Source

Source

Source

Source

Source

Source

Source

Source

Source

Source

Source

Source

Source

Source

Source

Source

Source

Source

Reviews

No reviews yet

Submit Review

Challenge: Disagree with the analysis | Approval: Confirm it's correct | Refinement: Suggest improvements