The use of cryptocurrencies in Afghanistan has reportedly spiked amidst the Taliban takeover. The country’s financial system is in a disarray, encouraging many to adopt digital currencies.
Some Afghans see cryptocurrencies as safe assets to park their wealth due to financial uncertainty. However, security experts worry that digital currencies may be used by the Taliban to circumvent Western sanctions, especially if the militant group begins to use them to facilitate national economic policy.
According to the 2021 Global Crypto Adoption Index published by crypto analytics firm Chainalysis last month, Afghanistan was ranked in the top 20 in a list of 154 nations. Just last year, Afghanistan was among the lowest-ranked countries on the list. Chainalysis calculates rankings according to the growth in the volume of crypto trading after accounting for the purchasing power of the population.
Western terror-related sanctions are expected to block the Taliban’s funding through conventional financial channels. Cryptocurrency trading platforms provide a path to shift large amounts of money without employing a bank intermediary. Some Taliban supporters have even asked the Taliban to train money exchangers to use bitcoin.
“It hasn’t caught on that much by the hawaladars, but there are some young, tech-savvy guys who are using bitcoins as a form of hawala… It’s censorship-resistant and highly efficient,” one Afghan trader said to Wall Street Journal.
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Hawaladars are informal money service businesses that were affected by the recent turmoil in Kabul. However, locally operated Bitcoin exchanges kept on running.
Richard Goldberg, former senior National Security Council official, admitted to the media outlet that the Taliban is likely to explore cryptocurrency options if Washington moves ahead with sanctions and cuts the country off from international finances. Some U.S.-designated international cartels and terror groups are already using cryptocurrencies.
However, in an interview with CNBC, the cofounder of cryptocurrency Ethereum Charles Hoskinson stated that digital currencies could also become an instrument of “resistance” against the Taliban.
“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. There is going to continue to be civil war and conflict and they are going to need resources,” Hoskinson said.
Musa Ramin, a cryptocurrency trader from Afghanistan, believes that virtual tokens are the safest bet against political uncertainty, and plans on making digital currencies up to 40 percent of his total net worth in the coming year. Ramin is one of many youngsters exploring the crypto industry. Data from Google Trends showed that searches for keywords like “crypto” and “bitcoin” spiked in July, just before the Taliban takeover.
22-year-old Farhan Hotak points out that his country does not have digital platforms like PayPal, Zelle, or Venmo. As such, he has to depend on alternatives, including cryptocurrencies. Even though digital currencies are not widely accepted for day-to-day transactions, Hotak continues to invest in them, believing that doing so will help safeguard his wealth.
Unlike cryptocurrency communities in other nations, those in Afghanistan mostly keep their identities secret, concealing their IP addresses using a VPN. “The crypto community in Afghanistan is very small… They actually don’t want to meet each other… For now, everyone just wants to stay hidden until things are nice,” Hotak said.
Many nonprofits have started accepting donations via cryptocurrencies to more easily help Afghans in the country. For instance, Code to Inspire, a school aiming to educate Afghan girls on coding and robotics, is accepting contributions in the form of digital currencies.