Citizens fear the Taliban will seize their property, which would worsen an already declining economy. In order to combat this, they invest not in bitcoin (BTC), but rather in stablecoins.
Protecting assets in Afghanistan
The idea is to have their wealth tied to fiat currencies. Officials of the country's crypto exchanges note that demand is high. People no longer store their wealth in cash or jewelry, and prefer cryptocurrencies.
Afghan citizens also claim that the Taliban are raiding homes and seizing their belongings. This incentivizes them to switch to cryptocurrencies. Reports from earlier this year also corroborate this massive adoption of cryptocurrencies. Some Afghans have used their cryptocurrency holdings to flee to Pakistan.
The United States blocked $9 billion in foreign exchange reserves. The Afghan economy is on the verge of collapse and people can only withdraw $400 a week.
An increasingly common situation
This is another example of how cryptocurrencies have found new uses over the past year in countries torn by civil crises and war. Ukraine has received over $60 million in crypto donations since Russia invaded it in late February. We can also note that the Ukrainian government has banned purchases of bitcoin (BTC) . In Myanmar, Tether has been recognized as an official currency by the government in exile. The latter seeks to fund a campaign to overthrow the military junta that took power last year.
Venezuela and Argentina are among the most frequently cited examples of cryptocurrencies serving the citizens of a country. Both of these countries have seen a surge in the use of cryptocurrencies following an economic downturn.
Ukraine has received tens of millions of donations in the form of cryptocurrencies. Crypto has proven to be a lifeline for millions. This proves that it is an effective way to fight repression and economic hardship.
A country of adoption for crypto and bitcoin (BTC)
In 2021, Afghanistan was ranked 20th out of 154 countries in Chainalysis' Crypto Adoption Index . A year ago, the company considered Afghanistan's crypto presence so minimal that it wasn't even rated.
It is not easy to buy cryptocurrencies in Afghanistan, in particular because it is impossible to transfer funds directly from an Afghan bank account to an exchange such as Binance. Due to the sanctions, banking ties with other countries are also severed.
This is where brokers come in.
A man known online as Habibullah Timori and his team use the traditional Hawala system, an informal method of money transfer that accounts for around 90% of financial transactions in Afghanistan. They send money, mostly US dollars, to contacts in countries like Iran, Turkey and the United States. In return, these people transfer digital tokens like bitcoin and stablecoins to Maihan's Binance wallet.
This means that a customer can bring money to Maihan and get Tether, bitcoin or other digital currencies in return. The brokerage also keeps a reserve of funds on hand in case clients want to exchange their cryptocurrencies for cash.
This type of D system is also popular in many African countries which use P2P to circumvent the restrictions of many countries on the continent. Like in Nigeria where it is very complicated to buy cryptocurrency through traditional financial systems.
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