Bangladesh
Retail_Trading_Status
- Analysis ID
- #604
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- Latest
- Created
- 2025-12-12 03:53
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- 67c751fe...
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Executive Summary
Retail cryptocurrency trading is illegal in Bangladesh, with the central bank explicitly prohibiting the holding, trading, and transacting of virtual currencies. The Bangladesh Bank (BB) classifies crypto activities as violations of the Foreign Exchange Regulation Act, 1947, and the Money Laundering Prevention Act, 2012, which can carry imprisonment terms. Law enforcement agencies, including the Rapid Action Battalion (RAB) and Detective Branch (DB), actively conduct arrests and raids targeting crypto traders and exchange operators.
Key Pillars
Bangladesh Bank (Primary Regulator)
Foreign Exchange Regulation Act, 1947 (Enforcement Basis)
Money Laundering Prevention Act, 2012
Anti-Terrorism Act, 2009
Criminal Investigation Department (CID) & Rapid Action Battalion (RAB) (Enforcement)
Landmark Laws
Foreign Exchange Regulation Act, 1947 (Act No. VII of 1947) - Enacted: 1947-03-11
- The primary law used to criminalize crypto trading. Section 23(1) prescribes imprisonment (up to 7 years) for unauthorized foreign exchange dealings, which the central bank applies to virtual currencies.
- Source
Bangladesh Bank Circular on Virtual Currencies (FE Circular No. (Various)) - Enacted: 2017-12-24
- Initial warning notice stating that cryptocurrencies are not legal tender and transactions may violate anti-money laundering and terrorist financing laws.
- Source
Bangladesh Bank Clarification on Crypto Legality (Press Release) - Enacted: 2021-07-29
- Reiterated the 'hostile' stance against crypto, explicitly refuting media reports that holding crypto was legal. It warned that any involvement could lead to legal and financial risks.
- Source
Circular on Monitoring Virtual Asset Transactions (BRPD Circular Letter No. 43) - Enacted: 2022-10-12
- Directed all scheduled banks to tighten monitoring and prevent the use of banking channels for transactions with Virtual Asset Service Providers (VASPs).
Considerations
Strict enforcement: Police and RAB actively arrest individuals for 'illegal bitcoin trading' under the Digital Security Act and FERA.
Banking Blockade: Banks are mandated to monitor and block accounts suspected of transacting with crypto exchanges.
No distinction for 'holding': While some legal interpretations suggested holding might not be a crime, the central bank's 2021 clarification effectively treats all involvement as a punishable offense.
Freelancer Risk: Freelancers receiving payments in crypto face significant legal risks when trying to convert to fiat.
Notes
The 'National Blockchain Strategy: Pathway to be a Blockchain-enabled Nation' (2020) encourages blockchain adoption for government services but explicitly excludes cryptocurrency, maintaining the 'hostile' stance. Travelers should be extremely cautious and ensure no crypto apps are visible or active on devices when entering the country.
Remaining Uncertainties
- Whether the 'National Blockchain Strategy' will eventually lead to a relaxation for specific utility tokens, though currently unlikely.
- The exact legal distinction between 'holding' and 'trading' remains theoretically debated by lawyers but is practically irrelevant due to police enforcement.
Detailed Explanation
Detailed Explanation
Retail cryptocurrency trading is illegal and banned in Bangladesh. The Bangladesh Bank (BB), the primary regulator, has adopted a consistently hostile stance, explicitly prohibiting the holding, trading, and transacting of virtual currencies. This prohibition is enforced under the Foreign Exchange Regulation Act, 1947, and the Money Laundering Prevention Act, 2012. The central bank's position was first formally communicated in a warning circular on December 24, 2017, which stated that cryptocurrencies are not legal tender and that transactions may violate anti-money laundering and terrorist financing laws. This stance was reinforced in a press release on July 29, 2021, which refuted media reports and clarified that any involvement with cryptocurrencies could lead to legal and financial risks, effectively treating even holding as a punishable offense. The regulatory framework is underpinned by a strict enforcement regime where law enforcement agencies, including the Rapid Action Battalion (RAB), the Detective Branch (DB), and the Criminal Investigation Department (CID), actively conduct arrests and raids targeting crypto traders and exchange operators, often under the Digital Security Act and the Foreign Exchange Regulation Act, 1947, which prescribes imprisonment of up to seven years for unauthorized foreign exchange dealings. The Bangladesh Bank has also mandated a banking blockade through the BRPD Circular Letter No. 43 on October 12, 2022, directing all scheduled banks to tighten monitoring and prevent the use of banking channels for transactions with Virtual Asset Service Providers (VASPs). This creates significant legal risks for freelancers receiving payments in crypto when attempting to convert to fiat. Importantly, while the government's 'National Blockchain Strategy: Pathway to be a Blockchain-enabled Nation' (2020) encourages blockchain adoption for public services, it explicitly excludes cryptocurrency, maintaining the overall prohibition. Travelers are advised to exercise extreme caution, ensuring no crypto-related applications are active or visible on devices when entering the country.
Summary Points
I. Regulatory Status
* Retail cryptocurrency trading is illegal and banned in Bangladesh.
* The central bank, Bangladesh Bank, maintains a hostile stance against all crypto activities.
II. Key Regulatory Bodies
* Bangladesh Bank (BB): The primary financial regulator issuing prohibitions and guidance.
* Criminal Investigation Department (CID): Involved in enforcement actions.
* Rapid Action Battalion (RAB): Actively conducts arrests and raids.
* Detective Branch (DB): Participates in law enforcement against crypto activities.
III. Important Legislation
* Foreign Exchange Regulation Act, 1947 (Act No. VII of 1947):
* The primary law used to criminalize crypto trading.
* Section 23(1) prescribes imprisonment (up to 7 years) for unauthorized foreign exchange dealings, which the central bank applies to virtual currencies.
* Money Laundering Prevention Act, 2012: Cited as a basis for prohibiting crypto transactions.
* Anti-Terrorism Act, 2009: Referenced in the context of terrorist financing risks.
* Bangladesh Bank Circular on Virtual Currencies (FE Circular, December 24, 2017):
* Initial warning that cryptocurrencies are not legal tender and transactions may violate AML/CFT laws.
* Bangladesh Bank Clarification on Crypto Legality (Press Release, July 29, 2021):
* Reiterated the hostile stance and warned that any involvement could lead to legal and financial risks.
* Circular on Monitoring Virtual Asset Transactions (BRPD Circular Letter No. 43, October 12, 2022):
* Directed all scheduled banks to tighten monitoring and prevent banking channels from being used for transactions with Virtual Asset Service Providers (VASPs).
IV. Compliance Requirements
* For individuals: No involvement is permitted; holding, trading, and transacting are prohibited.
* For banks and financial institutions: Must monitor and block accounts suspected of transacting with crypto exchanges or VASPs as per the 2022 circular.
V. Notable Restrictions or Limitations
* Strict enforcement: Police and specialized units actively arrest individuals for 'illegal bitcoin trading' under the Digital Security Act and the Foreign Exchange Regulation Act, 1947.
* Banking blockade: Banks are mandated to monitor and block accounts involved with crypto.
* No distinction for 'holding': While some legal interpretations suggested holding might not be a crime, the central bank's 2021 clarification effectively treats all involvement as a punishable offense.
* Freelancer Risk: Freelancers receiving payments in crypto face significant legal risks when trying to convert to fiat.
VI. Recent Developments or Notes
* The government's 'National Blockchain Strategy: Pathway to be a Blockchain-enabled Nation' (2020) encourages blockchain adoption for government services but explicitly excludes cryptocurrency.
* Travelers should be extremely cautious and ensure no crypto apps are visible or active on devices when entering the country.
Full Analysis Report
Full Analysis Report
The regulatory status of cryptocurrency in Bangladesh is characterized by a strict and active ban, enforced through a combination of central bank circulars and existing criminal laws. The Bangladesh Bank (BB) has consistently maintained that cryptocurrencies are not legal tender and that dealing in them constitutes a violation of the Foreign Exchange Regulation Act (FERA), 1947. Under Section 23(1) of FERA, unauthorized foreign exchange transactions are punishable by up to seven years in prison. The central bank's position is that since crypto is not approved by any central authority, its trade equates to illegal foreign currency dealing and money laundering.
This stance has been reinforced through multiple circulars. The first major notice in December 2017 warned the public against Bitcoin. In July 2021, a significant moment of confusion arose when a letter from the central bank to the Criminal Investigation Department (CID) was leaked, suggesting that the mere 'ownership' of crypto might not be a crime under current laws. However, the Bangladesh Bank immediately issued a press release (July 29, 2021) clarifying that its stance remained 'hostile' and unchanged, effectively closing any loophole for 'holding' assets. It reiterated that all activities involving virtual currencies are unauthorized and legally risky.
Enforcement in Bangladesh is tangible and severe. Unlike 'Gray-Zone' jurisdictions where bans exist on paper but are ignored, Bangladeshi law enforcement agencies, including the Rapid Action Battalion (RAB) and the Detective Branch (DB), actively conduct raids. There have been numerous documented arrests of crypto traders and exchange operators in 2021, 2022, and continuing into 2024/2025. These individuals are often charged under the Digital Security Act or FERA for conducting illegal financial transactions.
In October 2022, the Bangladesh Bank further tightened the screws by issuing a circular to all scheduled banks, ordering them to increase monitoring of accounts to prevent transactions with foreign Virtual Asset Service Providers (VASPs). This directive requires banks to display warnings on their websites and in branches, effectively creating a total financial blockade. Despite the government's 'National Blockchain Strategy' of 2020 which aims to foster blockchain technology, the separation between the technology (encouraged) and the currency (criminalized) remains absolute.
The regulatory status of cryptocurrency in Bangladesh is characterized by a strict and active ban, enforced through a combination of central bank circulars and existing criminal laws. The Bangladesh Bank (BB) has consistently maintained that cryptocurrencies are not legal tender and that dealing in them constitutes a violation of the Foreign Exchange Regulation Act (FERA), 1947. Under Section 23(1) of FERA, unauthorized foreign exchange transactions are punishable by up to seven years in prison. The central bank's position is that since crypto is not approved by any central authority, its trade equates to illegal foreign currency dealing and money laundering. This stance has been reinforced through multiple circulars. The first major notice in December 2017 warned the public against Bitcoin. In July 2021, a significant moment of confusion arose when a letter from the central bank to the Criminal Investigation Department (CID) was leaked, suggesting that the mere 'ownership' of crypto might not be a crime under current laws. However, the Bangladesh Bank immediately issued a press release (July 29, 2021) clarifying that its stance remained 'hostile' and unchanged, effectively closing any loophole for 'holding' assets. It reiterated that all activities involving virtual currencies are unauthorized and legally risky. Enforcement in Bangladesh is tangible and severe. Unlike 'Gray-Zone' jurisdictions where bans exist on paper but are ignored, Bangladeshi law enforcement agencies, including the Rapid Action Battalion (RAB) and the Detective Branch (DB), actively conduct raids. There have been numerous documented arrests of crypto traders and exchange operators in 2021, 2022, and continuing into 2024/2025. These individuals are often charged under the Digital Security Act or FERA for conducting illegal financial transactions. In October 2022, the Bangladesh Bank further tightened the screws by issuing a circular to all scheduled banks, ordering them to increase monitoring of accounts to prevent transactions with foreign Virtual Asset Service Providers (VASPs). This directive requires banks to display warnings on their websites and in branches, effectively creating a total financial blockade. Despite the government's 'National Blockchain Strategy' of 2020 which aims to foster blockchain technology, the separation between the technology (encouraged) and the currency (criminalized) remains absolute.
Source Evidence
Primary and secondary sources cited in this analysis
"Transaction with this currency may cause a violation of the existing money laundering and terrorist financing regulations."
"It is being reiterated to the public that no virtual currency/cryptocurrency is approved by Bangladesh Bank... refrain from trading or assisting in any type of cryptocurrency."
"Whoever contravenes any of the provisions of this Act... shall be punishable with imprisonment for a term which may extend to seven years."
"The circular says various foreign Virtual Asset Service Providers (VASP) are conducting transactions... using the customer accounts of some scheduled banks."
"The Rapid Action Battalion (RAB) has arrested four people from city's Mirpur area on charges of illegally trading cryptocurrency bitcoin."
"Two people have been arrested in Naogaon for their suspected involvement in trading of cryptocurrencies."
Web Sources (11)
Sources discovered via web search grounding
Search queries used (7)
- Bangladesh Bank notice on cryptocurrency trading legality
- Foreign Exchange Regulation Act Bangladesh cryptocurrency status
- arrests for cryptocurrency trading Bangladesh 2024
- Bangladesh Bank cryptocurrency circular official status 2024 2025
- Bangladesh Bank circular July 2021 cryptocurrency text
- Bangladesh Bank circular Dec 2017 cryptocurrency text
- Bangladesh Bank circular cryptocurrency Oct 2022 text
https://www.dhakatribune.com/business/banks/133954/central-bank-issues-notice-banning-bitcoin-in
https://observerbd.com/news.php?id=384043
https://www.observerbd.com/news/323970
https://www.tbsnews.net/economy/banking/refrain-dealing-virtual-assets-currencies-bb-497086
https://www.dhakatribune.com/business/253673/bangladesh-bank-don%E2%80%99t-use-cryptocurrency
https://coinfomania.com/cryptocurrency-regulations-in-bangladesh/
https://www.dhakatribune.com/business/banks/278035/bangladesh-bank-for-stronger-monitoring-of-illegal
https://www.bolnews.com/latest-news/bangladesh-bank-advises-against-using-cryptocurrencies/
https://bdnews24.com/economy/don-t-use-cryptocurrencies-bb-clarifies-its-stand-after-reports-on-its-confidential-letter
https://www.tbsnews.net/economy/banking/bb-urges-banks-increase-monitoring-prevent-crypto-transactions-512650
https://www.dhakatribune.com/business/banks/278035/bangladesh-bank-for-stronger-monitoring-of-illegal