Crypto is becoming a sort of lifesaver for Afghanistan‘s citizens as the economy suffered a huge setback following the Taliban’s takeover of the country last August. In an economy that is mostly dependent on cash transactions, shortages have led to the shutdown of banks and other financial institutions. On top of that, non-governmental institutions like the Western Union and SWIFT have stopped operating. Leaving afghans only with one option ie., cryptocurrencies.
According to Chainalysis’ Crypto Adoption index, Afghanistan is ranked 20th among 154 countries during the crypto boom of 2021. And in terms of peer-to-peer trade volume specifically, Afghanistan jumped to seventh place.
Ali Rahnavard, a digital asset dealer in Herat, one of the largest cities of Afghanistan in an interview pointed out the exponential increase in people trading virtual currency and that his customer base had also increased tenfold in the last year.
Mass influx of crypto donations
During the occupation, the Taliban restricted bank withdrawals in retaliation against the US sanctions. As a result, people struggle to access basic amenities. This received significant social media attention, with donations from NGOs and other organizations started pouring in.
However, due to Taliban restrictions, getting access to these funds was difficult. This is when NGOs started turning to donations in digital currency. Fereshteh Forough, founder of ‘Code to Inspire’, an NGO that taught Afghan women how to code, begin sending virtual currency to the academy’s graduates.
How Afghans evaded authorities using crypto?
Refusing to bow down, some of its citizens used Virtual Private Networks [VPNs] to hide their geographical location and IP address. But its problems didn’t end here.
Last year, Binance announced that it would cease SWIFT Bank transfers for user accounts in Afghanistan. This made it difficult for Afghans to withdraw or deposit digital assets from the exchange. To navigate around this restriction, crypto dealers started cropping up, accepting the local currency and US dollars, exchanging them for crypto.
The dealer would contact someone abroad to send these assets to his wallet and use the local Hawala system to deposit the same amount in the sender’s bank account. The supplier would then ask for the customer’s wallet address and send the crypto to them, mostly Tether.