Afghanistan

## Report on Retail Cryptocurrency Trading Status in Afghanistan

**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).

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### 1. Identified Current Status

**Banned**

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### 2. Detailed Narrative Explanation

Retail cryptocurrency trading (buying, selling, and holding) is explicitly prohibited in Afghanistan for individual citizens and residents. This ban has been enforced by the Taliban regime since they regained power in August 2021, with the primary justifications being religious and economic concerns.

**Historical Context and Development of the Ban:**

Prior to the Taliban's return, Afghanistan had seen a surge in cryptocurrency adoption, particularly in 2021, as a means to navigate a collapsing financial system, sanctions, and difficulties in accessing international financial networks. The country even ranked 20th out of 154 countries in Chainalysis' 2021 Global Crypto Adoption Index.

However, the landscape shifted dramatically after August 2021. Key developments include:
*   **August 2021:** The Taliban's takeover led to a severe financial crisis, with frozen foreign reserves and sanctions imposed on the country. This initially spurred further interest in crypto as a lifeline.
*   **June 2022:** Da Afghanistan Bank (the central bank) reportedly banned online foreign exchange trading, with a spokesperson stating it was illegal and fraudulent, and that "There is no instruction in Islamic law to approve it." While this initially focused on forex, it laid the groundwork for the crypto ban.
*   **August 2022:** The Taliban regime explicitly banned all forms of cryptocurrency and its trading. The ban was justified on religious grounds, declaring cryptocurrencies "haram" (forbidden under Islamic law) due to their speculative nature and perceived association with gambling. Economic concerns, including fraud and financial instability, were also cited.
*   **2023-2024:** Authorities increased crackdowns on forex and digital asset trading. Reports emerged of crypto exchanges being shut down and individuals involved in crypto dealings being arrested. For instance, in Herat province, at least 16 crypto exchanges were reportedly closed in August 2022.
*   **February 2024:** Reports from Badghis province indicated local Taliban officials were actively denouncing cryptocurrency as un-Islamic and warning of legal repercussions for those who defied the ban.

**Regulatory Environment and Enforcement:**

The current regulatory environment is one of an absolute prohibition on cryptocurrency activities for the general populace. Da Afghanistan Bank, the country's central bank, enforces this ban. There are no specific KYC/AML (Know Your Customer/Anti-Money Laundering) requirements for cryptocurrency platforms catering to retail users, as the activity itself is illegal. Any such activity would be considered operating outside the law.

The ban means that cryptocurrencies cannot legally be used for payments, investments, or remittances by individuals. Violators risk fines, confiscation of assets, and arrest.

Despite the strict ban and enforcement efforts, reports indicate that some cryptocurrency trading continues underground, primarily through peer-to-peer (P2P) networks. This is driven by ongoing economic instability, lack of access to traditional banking services, and the need for remittances. However, such activities carry significant legal risks for those involved. Enforcement of the ban can be inconsistent due to resource limitations and the decentralized nature of P2P trading, but crackdowns do occur.

Interestingly, there have been some reports suggesting a paradox where, despite the public ban, some individuals within the Taliban itself might be involved in cryptocurrency trading. However, the official stance and the legal framework for ordinary citizens remain a strict prohibition.

The Taliban-led government has been working to align financial laws with Sharia principles, which underpins the ban on cryptocurrencies due to their perceived speculative and gambling-like nature. In October 2024, Da Afghanistan Bank approved a new law on exchange and monetary services, emphasizing licensed operations for traditional money services like Hawala and reiterating the ban on online foreign exchange and cryptocurrency trading on religious grounds.

**AML/CTF Framework (General):**

While not specific to crypto (as it's banned), Afghanistan does have a general AML/CTF (Anti-Money Laundering/Combating the Financing of Terrorism) framework. FinTRACA (Financial Transactions and Reports Analysis Center of Afghanistan) is the country's Financial Intelligence Unit (FIU), responsible for collecting, analyzing, and disseminating information related to money laundering and terrorism financing. Financial institutions are generally required to have AML/CTF programs, identify customers, report large cash transactions and suspicious activities, and retain records. However, these regulations do not legitimize or provide a framework for cryptocurrency trading, which remains outside the legal financial system.

**Future Outlook:**

The Taliban regime has shown no indication of reversing the ban on cryptocurrencies. The official policy remains one of strict prohibition based on religious and economic grounds. While underground P2P trading may persist due to economic necessities, it operates in a high-risk, illegal environment. The long-term future of cryptocurrencies in Afghanistan will likely depend on broader political and economic developments, including any potential changes in international sanctions and internal governance.

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### 3. Specific, Relevant Text Excerpts

*   **Coinfomania (June 25, 2025):** "Afghanistan stands as one of the few countries with an absolute ban on cryptocurrency, enforced by the Taliban regime since 2022 on religious and economic grounds."
*   **Coinfomania (June 25, 2025):** "August 2022: Taliban banned the use of crypto, claiming it is haram (forbidden under Islamic law)."
*   **Coinfomania (June 25, 2025):** "Crypto cannot be used for payments, investments, or remittances. Violators risk fines or confiscation of assets."
*   **AInvest (June 25, 2025):** "Afghanistan has implemented a strict ban on cryptocurrency since 2022, driven by religious and economic considerations under the Taliban regime. Despite this prohibition, cryptocurrency transactions continue to thrive underground, facilitated by peer-to-peer (P2P) networks that circumvent government oversight."
*   **AInvest (June 25, 2025):** "The legal status of cryptocurrency in Afghanistan is clear: it is banned. The government does not recognize any form of cryptocurrency trading, mining, or usage, deeming it prohibited under Sharia law."
*   **Afghanistan International (February 19, 2024):** "A resident of Badghis province shared a video with Afghanistan International, capturing a Taliban herald denouncing cryptocurrency as un-Islamic. The herald in the video asserts that cryptocurrency is considered gambling and haram (forbidden) according to Islam."
*   **Afghanistan International (February 19, 2024):** "Additionally, in a separate audio message, Abdul Samad Jawid, the Taliban-appointed governor of Badghis, announced a ban on digital and online currency transactions within the province. He emphasised that individuals defying this ban would face legal repercussions."
*   **TRM Labs (December 12, 2022):** "In August 2022, the Taliban banned all forms of cryptocurrency and its trading on religious grounds, declaring it to be 'haram' or forbidden to Muslims because of its speculative nature. Traders were arrested and by November 2022, the value of crypto transactions had dropped dramatically to $80,000 a month."
*   **Blockworks (August 25, 2022):** "Sayed Shah Sa'adat, head of the police's counter-crime unit, told reporters that the central bank banned crypto trading as the practice spawned issues and scams. All people involved in the local crypto businesses were arrested and their shops were closed."
*   **Ariana News (October 20, 2024):** "Also in 2022, the central bank banned cryptocurrency trading – also on the grounds of it being sinful." This was mentioned in the context of the central bank approving a new law for money-changing businesses and bringing banking laws in line with Sharia.
*   **Nominis (January 16, 2025):** "In mid-2024, the Taliban imposed an official ban on crypto trading, defining it as 'haram; under the interpretation of Islamic law." (Note: While this source mentions mid-2024 for an "official ban," other sources clearly indicate the ban was effectively in place from August 2022. This might refer to a re-emphasis or broader communication of the existing ban.)
*   **CCN.com (February 3, 2025):** "Afghanistan banned cryptocurrency again in 2022 under Taliban rule. Again, the reason was financial instability and fraud concerns. Authorities shut down exchanges in Herat and arrested several operators, making crypto transactions highly risky."

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### 4. Direct, Accessible URL Links to Sources

*   Coinfomania (June 25, 2025): *Cryptocurrency Regulations in Afghanistan* - `https://coinfomania.com/cryptocurrency-regulations-in-afghanistan/` (Note: While the link provided by the search was a Google redirect, the source is Coinfomania. The direct link would be to their article on Afghanistan's crypto regulations.)
*   TRM Labs (December 12, 2022): *Crypto and Afghanistan - Financial Lifeline in the Midst of Crisis* - `https://www.trmlabs.com/post/crypto-and-afghanistan-financial-lifeline-in-the-midst-of-crisis` (Note: The search result link is a Google redirect, the actual source is TRM Labs.)
*   Afghanistan International (February 19, 2024): *Taliban Declares Cryptocurrency Banned in Badghis* - `https://www.afintl.com/en/202402190992` (Note: The search result link is a Google redirect, the actual source is Afghanistan International.)
*   Wikipedia: *Legality of cryptocurrency by country or territory* - `https://en.wikipedia.org/wiki/Legality_of_cryptocurrency_by_country_or_territory#Afghanistan`
*   Nominis (January 16, 2025): *The Taliban's Crypto Paradox: Banned for civilians, crypto remains popular among terrorist leaders* - `https://nominis.co/blog/the-talibans-crypto-paradox-banned-for-civilians-crypto-remains-popular-among-terrorist-leaders/` (Note: The search result link is a Google redirect, the actual source is Nominis.)
*   AInvest (June 25, 2025): *Afghanistan's Crypto Ban Fails to Halt Underground Trading* - `https://www.ainvest.com/news/articles/afghanistan-s-crypto-ban-fails-to-halt-underground-trading-20250625074227/` (Note: The search result link is a Google redirect, the actual source is AInvest. The exact URL might differ slightly.)
*   CoinStats (June 25, 2025): *Cryptocurrency Regulations in Afghanistan...* - `https://coinstats.app/blog/cryptocurrency-regulations-in-afghanistan/` (Note: The search result link is a Google redirect, the actual source is CoinStats.)
*   Binance Square - Nuristani Eagle (April 26, 2025): *#Afghanistan The general situation of cryptocurrency in Af* - `https://www.binance.com/en/feed/post/6770517081797` (Note: User-generated content on Binance Square, corroborates general sentiment of uncertainty and underground use despite lack of official legality).
*   Traders Union (June 7, 2025): *Best Crypto Exchanges in Afghanistan for June 2025* - `https://tradersunion.com/interesting-articles/best-crypto-exchanges-in-afghanistan/` (This article confirms the ban and lack of regulation for exchanges).
*   Cointelegraph (August 29, 2022): *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`
*   Blockworks (August 25, 2022): *Afghanistan Shuts 16 Crypto Exchanges, Arrests Staff: Report* - `https://blockworks.co/news/afghanistan-shuts-16-crypto-exchanges-arrests-staff`
*   CCN.com (February 3, 2025): *10 Countries Where Crypto Remains Banned in 2025* - `https://www.ccn.com/analysis/10-countries-crypto-remains-banned/`
*   Cointelegraph (August 25, 2022): *Afghan police close down cryptocurrency exchanges to enforce central bank ban: Report* - `https://cointelegraph.com/news/afghan-police-close-down-cryptocurrency-exchanges-to-enforce-central-bank-ban-report`
*   Ariana News (October 20, 2024): *Afghanistan's central bank approves new money-changers' law* - `https://www.ariananews.af/afghanistans-central-bank-approves-new-money-changers-law/`
*   NameScan: *AML/CTF compliance in Afghanistan* - `https://namescan.io/aml-cft-compliance-by-country/afghanistan`
*   MemberCheck: *AML/CFT Legislation in Afghanistan* - `https://membercheck.com/aml-cft-compliance-by-country/afghanistan/`

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