After the Taliban took full control of Afghanistan in August last year, many international non-governmental organizations and services stopped operati
After the Taliban took full control of Afghanistan in August last year, many international non-governmental organizations and services stopped operating in the country. Among them were payment services like Western Union and Swift.
Many Afghans subsequently began to learn about cryptocurrencies and the underlying blockchain technology to — at the very least — receive remittances from abroad. As electronic payment services like PayPal and Venmo have never been available in the 5,000-year-old country, Afghans have lost many opportunities in the online business world.
“We lost many opportunities like blogging, affiliate marketing and online dropshipping because most of them pay with PayPal,” Heshmat Aswadi, a local crypto trader, told Cointelegraph in an interview. “I learned a lot about blogging but it was of no use since I could not get paid online.”
Aswadi is studying business administration at Herat University and wanted to create a fintech blog but as he researched on how to get paid, the 22-year-old lost hope.
He later came to know about cryptocurrencies “which was one of the best things to ever happen to him,” he said. Aswadi learned as he went as the crypto industry grew in mid-2021. He now trades small amounts of digital assets that allow him to make some extra money.
According to Aswadi, banks and governments, especially developing countries like Afghanistan and Iran, must consider using digital currencies as a legal tender. “They could at least use a central bank digital currency,” he added.
“Although there is no need for our government to spend extra money on a central bank digital currency project, if they don’t want decentralized assets, a CBDC could still be an option.”
Remittances
When the Taliban assumed power, money transfer services like Western Union and Swift stopped their operations in the country, leaving many Afghans who got money from relatives abroad without a source of income. Currently, the only way to receive money from other countries is by using crypto.
During the crypto boom in 2021, Afghanistan was ranked 20th among 154 countries in Chainalysis’ 2021 Crypto Adoption Index.
Ali Rahnavard, a local crypto dealer and trader in Herat, one of the largest cities of Afghanistan, says he saw immense growth in the number of Afghans using cryptocurrencies. Rahnavard said that he saw his customers increase by “ten times” in the past year.
“The main reason behind this growth is that people needed to find a way to receive money from their family and friends who live in other countries,” Rahnavard told Cointelegraph.
“It’s much cheaper and faster” than the previous payment systems like Western Union, Rahnavard says.
In addition to trading, he has been teaching Afghans how to trade and use cryptocurrencies for the past four years. This knowledge would be useful if the country’s Taliban government decides to start using crypto to open up e-commerce in the country.
“Crypto could pave the way for the Taliban to get back to international business as well.” he said, “While the Taliban don’t seem to have the necessary knowledge on how to use blockchain technology at the moment, they could at least help by not banning cryptocurrencies.”
How is crypto used in Afghanistan?
In November 2021, Binance announced that it will not support Swift bank transfers to user accounts in a long list of countries including Afghanistan. Since most people in the country use Binance, it became difficult to deposit or withdraw crypto to or from the crypto exchange.
Currently, for the customers to get crypto, they go to a crypto dealer’s shop where they pay the amount in the local fiat currency, afghanis, or U.S. dollars.
In order for the dealer to get cryptocurrency, he needs to contact someone abroad to send crypto to his wallet. The dealer usually uses a local Hawala system to deposit the money to the sender’s bank account. The reason dealers don’t use credit or debit cards is that they charge around 11% for international purchases, according to Rahnavard.
The dealer then asks for the customer’s wallet address and sends the crypto, mostly Tether (USDT).
Did the Taliban ban crypto?
The Taliban still haven’t announced any regulations or bans regarding digital currencies. If a top Islamic scholar says that crypto is haram (forbidden), the Taliban would ban it “without thinking twice,” Rahnavard said. If they consider it halal (permissible), “we might use the best tech in the world, forever,” he added.
One of the biggest blocks on the way to crypto’s mass adoption in Afghanistan is the low literacy rate: Only 43% of Afghanistan’s population is literate and an even smaller number have regular access to the internet.
A crypto trader anonymously told Cointelegraph:
“Cryptocurrencies could be our only chance and window to true financial freedom. With all the problems we have in…
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