Afghanistan closes 16 cryptocurrency exchanges and detains staff

Following the Taliban takeover last year, some people in Afghanistan turned to cryptocurrency as a lifeline. However, authorities are now cracking down hard on the local market, reportedly closing at least 16 cryptocurrency exchanges in the country’s western Herat province.

The decision was made three months after Afghanistan outlawed cryptocurrency trading, according to local independent news source Ariana on Wednesday. Which cryptocurrency exchanges were impacted by the closures wasn’t specified.

According to Sayed Shah Sa’adat, chief of the police’s anti-crime division, the central bank outlawed cryptocurrency trading since it gave rise to problems and scams.

According to him, all local crypto business owners were detained and their enterprises were shut down.

Online foreign exchange trading was purportedly outlawed in June by Afghanistan’s Taliban-controlled central bank. There is “no direction in Islamic law to authorize” FX trading, a bank spokesman told Bloomberg, adding that the practice is illegal and fraudulent.

It’s unclear whether cryptocurrency transactions in particular were covered by that ban.

The local population’s financial status deteriorated when the Taliban took back control of Afghanistan as foreign aid worth billions of dollars stopped and US sanctions froze its foreign assets.

Local interest in cryptocurrencies increased as a result of the Taliban takeover, but citizens found it challenging to purchase digital assets due to sanctions.

Web searches for “bitcoin” and “crypto” had increased soon before the takeover, according to Google Trends data. In Chainalysis’ 2021 Global Crypto Adoption Index, which charts the popularity of digital assets worldwide, Afghanistan even made it into the top 20 nations.