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Taliban Bans Crypto in Afghanistan, Releases Arrested Crypto Dealers

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Taliban Bans Crypto in Afghanistan, Releases Arrested Crypto Dealers
Source: Adobe / Андрей Глущенко

The Taliban released the arrested crypto dealers after about a week of detention, but imposed a nationwide ban on digital assets citing scams and fraud.

On August 14, the Taliban forces attacked a total of 16 local crypto exchanges in Herat, Afghanistan’s third-largest city, without notice, and arrested crypto-asset dealers while shutting down their businesses, according to reports by local media.

The arrested crypto dealers were released late last week but have been asked to cease all cryptocurrency-related operations, said the CEO of one of the local crypto exchanges, who asked to remain anonymous. For safety reasons. Cryptonews.com.

The CEO added that they had no prior warning and had no idea that the Taliban had banned crypto-assets.

“They stopped us to tell us that we couldn’t continue our operations,” he said.

Meanwhile, local reports claim that the Taliban imposed a crypto ban three months ago. Sayed Shah Saadat, head of the Herat Police Crime Unit, said the Afghan central bank, Da Afghanistan Bank, asked for action against crypto firms.

“Bank Da Afghanistan said in a letter that digital currency trading has caused a lot of trouble and is defrauding people, so they should be shut down,” Saadat reportedly said. “We took action and arrested all exchangers involved in the business and closed their stores.”

Rumor has it that Taliban forces have also seized crypto holdings from arrested crypto dealers. However, the CEO denied this claim.

Herat, the westernmost province of Afghanistan near the border with Iran, is said to host four of the six well-known Afghan crypto exchanges.

Besides Herat, local crypto exchanges are currently resuming operations in other provinces of Afghanistan, an employee of a Kabul-based local crypto exchange said.

As noted, several local crypto exchanges in Afghanistan tried to go undercover in October last year after the Taliban took over the country in an attempt to avoid their attention. At the time, Sayed, CEO and founder of a crypto exchange in Kabul, was concerned about whether the Taliban would view crypto-assets as Haram (not Sharia compliant).

“Many Muslim scholars have presented their views [Fatwa] on the issue of cryptocurrencies, stating that it is Halal. But the Taliban may refuse to accept these prospects,” he said.

In Islamic theology, only items with intrinsic value are exchangeable. If a scholar thinks that crypto-assets have value in themselves and are not just speculative currencies with no other use, they would declare them as Halal (Sharia Compliant).

Notably, the Taliban has not uniformly presented its views on cryptocurrencies and has instead banned them, citing the risks of scams and fraud.

Crypto exchanges in Afghanistan incorporate the peer-to-peer (P2P) model, which means that in order to buy or sell crypto, a customer must come in person and wait for all transactions to be processed. The transaction takes place in cash and does not require any disclosure by either party involved.

In its 2021 Global Crypto Adoption Index, blockchain analytics firm On-chain analysis class Afghanistan 20th out of 154 countries in terms of crypto adoption.

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Afghan bitcoin exchanges go undercover as Taliban yet to announce crypto policy

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