KABUL, Afghanistan – The Taliban recently imposed a ban on the trading of cryptocurrencies inside the war-recovering nation. However, for a dedicated wing of devotees, the decentralized financial system is still a critical lifeline amid an era of economic hardship and uncertainty.
“Trading in crypto has turned my life downside up,” Syawash, 24, tells me one late afternoon in the garden of a quiet café in the heart of Kabul. “Last year, I didn’t make the best choices, but I am holding on to those coins and each day trading, targeting a different coin per day. I know in the future that I will make big money out of it.”
In mid-August, the Taliban government – officially termed the Islamic Emirate of Afghanistan – briefly detained several forex dealers, inducing the sentiment that crypto was also prohibited given concerns over fraud and scamming.
However, crypto proponents like Syawash point to a lack of understanding more than comprehensive exploitation and defrauding. In his view, several crypto newcomers bought coins that fell fast and couldn’t figure out why they lost money; their investments dwindling by the day.
“They thought shopkeepers (those who buy and sell crypto) were scamming them, so they filed a case against them to the Taliban,” Syawash explains, adding that there was another case in Kabul during the last corruption-riddled Republic time in which a prominent Forex company did cheat investors by claiming to trade on their behalf when in reality that was only dealing on their own server and subsequently stealing monies. “Given these cases, the Taliban banned crypto.”
Advocates of the Blockchain-fueled digital currency lament the subsequent policy shift against digital currencies is economically unfortunate, especially given crypto’s small but significant place in providing several Afghans with the means to keep afloat as the financial sector spiraled in the months following the Taliban’s rapid ascent to power and the U.S withdrawal in August 2021.
After the U.S.-backed Islamic Republic government collapsed, the Islamic Emirate was slapped with global sanctions, which led to the freezing of assets and the departure of international donors. The dire situation led many Afghans to turn to digital currencies and stablecoins to feed their families, as all Afghans even struggled to access their own money at ATMs – limited to taking out no more than $200 per week and required to line up for days on end just to take out a restricted amount.
Syawash stresses that it quickly became one of the most impactful ways to support Afghans in need.
“When money was stopped in the country, it was the crypto that people were sending that helped the country, and it was one of the best ways because it is so low in fees transferring to cash,” he notes, pointing out that crypto trading helped Afghans evade the cash shortage and hefty commissions that come with wire transfers and the traditional hawala banking system.
Before the Taliban’s crypto crackdown, Afghanistan was viewed as an up-and-coming crypto hub, ranked 20 out of 154 countries by Chainalysis’s 2021 Global Crypto Adoption Index. Further, the use of crypto in the first year of Taliban rule is estimated to have increased by 80 percent.
Syawash’s barrage into the industry came at the end of 2019, when the security situation deteriorated considerably, and many Afghans lost their jobs. As an IT professional, he started researching the crypto arena and learned the ins and outs from free online courses and YouTube tutorials from India.
At the start of 2021, Syawash had become the country’s go-to for all things digital currency and thus launched his slate of online classes – including beginner, intermediate and advanced – under the umbrella of his own company, Afghan Cryptocurrency (ACA).
Syawash also underscores the benefits of the trading and transfers for women in the long-wounded country, including the decreased risk of seized critical monies. In addition, he has taught around 86 women the fundamentals of crypto. While the figure pales compared to the hundreds of males he has taught, it is certainly a start.
Yet with or without crypto, Taliban top-brass are confident that the country is getting back on its own two feet.
“Economically, the government has significantly improved its relations – especially with the likes of India and China looking at the mineral sector and other resources,” one Taliban official agreed to speak on background. “And the country has not had this kind of peace and security. So it is progress, step by step.”
Some crypto exchanges are still operating under the radar, though all have, at least on the surface, shuttered. Crypto exchanges in Afghanistan utilize a peer-to-peer (P2P) model, by which a customer has to physically visit the exchange to buy or sell crypto and remain there until all transactions are handled. The trade uses cash, and further disclosure of the parties involved is not required.
I learn that four exchanges located in Kabul, Mazar e-Sharif, Herat and Nimroz, will still buy and sell crypto, charging 2.5 percent and 3.5 percent commissions, respectively. They have removed the banners and signage from their exterior, but those in the know, know.
Thousands of digital devotees still convene in virtual groups and channels, mostly on encrypted apps such as Telegram and WhatsApp, speculating on fickle currencies and sharing tips and advice on where to sell and buy.
However, for now, Syawash has hit the pause button on his business.
“Once the (rumors) of a ban came in, everyone was afraid. I received messages from the Taliban to stop. Nobody can block or ban crypto as it is online, but it can’t be done publicly,” Syawash says. “Students still come to me, asking for classes, but I tell them they should wait.”
Yet despite the clampdown, coupled with the overall drop in crypto values across much of the market, Afghan enthusiasts remain optimistic that digital currencies are still the way of the future.
“I see a good future for it; if it can be regulated in the next five or six years, it will be official in the country,” Syawash enthuses.
Solomon bin Shah, the Deputy Economic Minister under the previous government – who remains in Kabul as a financial expert in the private sector – is also hopeful that crypto will someday have a staple spot in Afghan society, albeit with some caveats.
“There is a certain segment of the society that know crypto and understand crypto and deal in crypto, and that is not going to end even if the Taliban bans it because (no one) has the tools to curb the internet,” he explains. “But it isn’t going to expand anytime soon, not until (more people) understand crypto.”
And that might mean starting with the government itself.
“They (the Taliban) are fascinated by it when you talk to them about this, but then since (many) don’t understand the topic, they lose interest in a few minutes,” bin Shah adds. “Still, it could be a supplement to the (Afghani currency), but I don’t ever see it as a replacement.”
In spite of this, Syawash maintains that more Taliban know about digital currencies than might appear at first glance.
“I know several (Taliban) do the crypto trading, people from the banking sector and Ministry of Finance,” he says, gaining momentum. “I don’t know why they haven’t raised their voice yet.”
Maiwand Naweed contributed to this report.