Since the Taliban took over Afghanistan in August 2021, the country has plunged to the bottom of the “Crypto Adoption Index”, says Chainalysis in its latest report. The research firm highlighted that dozens of crypto dealers, under the Taliban’s rule, have been arrested. The Ministry for the Propagation of Virtue and the Prevention of Vice declared cryptocurrency haram (forbidden as prescribed under Islamic law) after equating it to gambling.
The war-torn country’s on-chain activity spiked to a temporary high right after the Taliban’s takeover. But then it took an unprecedented plunge. The on-chain value, from November 2021 to date as per the report, received by users based in Afghanistan has averaged less than $80,000 a month. This is a far cry from the $68 million the country’s citizens received in the average month preceding the takeover.
Chainalysis described the Taliban’s crackdown as having a massive chilling effect on Afghanistan’s crypto markets. It said crypto dealers have been left with three options which are to cease operations, flee the country, or risk arrest. The report stated that some young people have a few hundred bucks for day trade. But a source told Chainalysis that it’s used in money laundering where the source of the money is illegal – bribes or drug money. The source believes that anyhow crypto would be challenging to implement in a country like Afghanistan with sparse cellular networks, where just a small portion of the population uses smartphones.
The research firm pointed out that US dollars are widely accepted in Afghanistan and the people have an understanding of its volatility as well compared to crypto.