March 24, 2023

Afghan law enforcement officials reportedly shut down at least 16 cryptocurrency platforms in the western province of Herat. The operation comes three months after the current Taliban government banned digital asset trading activities.

Notably, last year’s regime change in Afghanistan has led to economic uncertainty in the region. Interestingly, this instability has prompted some locals to convert their fiat currencies into digital assets and stablecoins.

Afghan cryptocurrency exchanges in the crossfire

recent coverage The Herat police stopped the operations of at least 16 cryptocurrency trading venues in the country’s second most populous province, the disclosure said. The actions of the authorities were taken due to the negative stance of the central bank on the digital asset space. Not long ago, it argued that crypto transactions “have caused a lot of problems and are deceiving people” and should therefore be restricted.

Herat Money Exchnagers’ Union also supports closing these platforms. According to the entity, criminals often defraud individuals through digital currency transactions because the majority of Afghanistan’s population is not sufficiently economically educated and is vulnerable to fraudulent schemes.

Also speaking on the matter were some residents of Herat. Shahram classifies the cryptocurrency industry as a “new phenomenon” that is not so advanced in Afghanistan. Therefore, the government needs to monitor it in order to protect domestic investors.

Mawla Alizada has a similar stance. In her opinion, crypto companies are mainly run by criminals, which is why she supports the government’s decision to ban digital asset trading locally.

“People also suffer because of syndicates involved, and rates fluctuate on a daily basis,” she added.

Taliban regime boosts cryptocurrency adoption

Afghanistan made headlines last August when the Taliban, an ultra-conservative political and religious sect, regained control of the country. The Western world (led by the US) was not satisfied with the new government’s civil war to regain power and imposed financial sanctions on the country.

As a result, Afghanistan, known as one of the poorest countries, is plunged into a deeper crisis. The widespread panic in the country has led some of its residents to look for alternative currency options to protect their wealth, and interestingly, a large portion of them have turned their attention to cryptocurrencies and stablecoins.

This is surprising because the citizens of the Central Asian country have previously relied mainly on jewellery, precious metals and cash during turbulent times.

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