Amid rising uncertainty under the Taliban regime, local crypto exchanges in Afghanistan are trying to keep a low profile by removing banners and interacting more conservatively.
Taliban fighters took control of Kabul, the capital city of Afghanistan, on August 15, putting a swift end to nearly 20 years of a US-led coalition in just ten days. Now, as they prepare to implement a new government, fears of censorship and restraints come back to life.
During the first period of Taliban governance, which extended from 1996 to 2001, the Islamic movement forbade some forms of consumer technology — which, at the time, was largely limited to music, television, and film.
Moreover, even this time around, the Taliban have reportedly banned women from having camera phones in some outlying provinces of Afghanistan. While the veracity of the news is yet to pan out, it has already made people suspicious of what is oncoming.
Among them, local crypto dealers have also decided to be on the safe side. Moreover, they operate in person – in order to buy or sell crypto, a customer needs to attend in person and wait until all the transactions are processed. The deal takes place in cash and does not require disclosure by any of the parties involved.
The majority of such exchanges in Afghanistan support major cryptoassets like bitcoin (BTC) and ethereum (ETH). However, to sidestep volatility, some have restricted their trades to stablecoins like tether (USDT).
And now, the majority of such exchanges have removed their posters and are interacting with great caution. They are barely accepting new customers and tend to ignore messages when contacted via social media platforms.
“I largely fear Taliban fighters. They are very suspicious of things they don’t understand, and they sometimes act before consulting with their leaders,” Abdul, owner of a crypto exchange in Herat, told Cryptonews.com. “If they show up here and ask me what it is that I do, I am afraid I wouldn’t be able to convince them.”
Abdul says that the Taliban might adopt cryptocurrencies, but they first need to understand it.
“They [Taliban] haven’t addressed crypto so far, and I don’t expect them to do anytime soon,” according to Sayed, CEO and Founder of a crypto exchange in Kabul, told Cryptonews.com.
“Crypto should be their last concern. There is Daesh [ISIS], the Resistance [NRF], and a deteriorating economic crisis. These issues have greater importance.”
However, the CEO says he is concerned whether the Taliban would consider cryptoassets as Haram (non-compliant with Sharia Law). “A lot of Muslim scholars have presented their perspective [Fatwa] on the matter of cryptocurrencies, declaring that it is Halal. But the Taliban may refuse to accept those perspectives,” he said.
In Islamic theology, only objects with intrinsic value are tradeable. If a scholar believes cryptoassets have value in and of themselves and are not just imaginary currencies with no use cases, they would declare them as Halal.
Decentralized cryptoassets do have intrinsic value because they provide a utility: they allow data and value to flow in a permissionless, and borderless way. However, to really understand this, scholars need to take a close look at how the underpinning technology—blockchain—works.
Sayed estimates that if the Taliban study cryptoassets and understand their benefits, they would not forbid people from using them.
“For the isolated people of Afghanistan, crypto provides a means of interacting with the world,” he said.
Crypto: for and against the Taliban
Afghanistan has one of the fastest rates of crypto adoption, according to US-based blockchain analysis company Chainalysis. In its 2021 Global Crypto Adoption Index, it ranked Afghanistan 20th out of 154 countries in terms of crypto adoption.
Meanwhile, as Afghans adopt cryptoassets to cope with a deepening financial crisis, the Western world estimate that the Taliban will use these virtual assets in an effort to circumvent sanctions. The Wall Street Journal reported in September:
“If the Taliban were to adopt cryptocurrency as part of a national economic policy, it could aid efforts to circumvent some Western sanctions and other leverage against the country’s new rulers, say some former US officials and security experts.”
However, in late August, Charles Hoskinson, founder of Cardano (ADA), said that crypto adoption is poised to gain momentum in Afghanistan, particularly to fill the privacy gap that can easily put people’s lives in peril. However, Hoskinson mentioned that the Taliban can also exploit the openness of crypto.
“It is my belief that cryptocurrencies are going to play a larger role in Afghanistan this time around, in the war for and against the Taliban forces,” Hoskinson said.