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Several exchanges in Afghanistan’s Herat close shops as ban on digital assets takes effect

Several exchanges in Afghanistan’s Herat close shops as ban on digital assets takes effect

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Police in the city of Herat have begun enforcing a nationwide ban on digital asset trading imposed by central bank Da Afghanistan Bank this month.

Shah Sa’adat, head of the city’s police anti-crime unit, told Bloomberg that more than 20 digital asset companies had been shut down. Police also arrested 13 digital asset traders for defying the ban, most of whom have been released on bail.

“The central bank gave us an order to prevent all money changers, individuals and businessmen from trading in fraudulent digital currencies such as Bitcoin,” Saadaat said in a statement.

Herat, Afghanistan’s third largest city with an estimated population of more than 500,000, has been a hub for the digital asset exchange. Four of the six largest digital asset brokerages in Afghanistan are located in the region.

According to a local report, Herat residents have taken the enforcement action with mixed feelings. Ghulam Mohammad Suhrabi, head of the Herat Money Exchangers’ Union, a local financial advocacy group, supported the move, saying the digital asset should be banned because it remains largely misunderstood in the Afghan market.

Meanwhile, another resident called for regulations and market oversight to ensure Afghans make better investment decisions and don’t fall prey to scams.

Afghanistan and digital assets

Some religious scholars had predicted the banning of Da Afghanistan Bank’s digital assets, according to a Bloomberg report. Scholars argued that the Taliban would ban the asset class because it is considered “haram” or forbidden to Muslims because it has elements of betting.

This comes after the Taliban-led government said it was investigating whether digital assets could be allowed under Islamic financial practices, while considering options to revive the country’s collapsed economy.

Meanwhile, a growing number of the country’s residents have turned to digital resources since the Taliban’s takeover last year. According to a BBC report, digital assets have become one of the easiest ways to conduct cross-border transactions due to US sanctions on the country.

Before the Taliban took over, Afghanistan’s previous government was more receptive to sustaining the economy with digital resources. Already in 2019, the central bank considered issuing a digital asset loan.

Unlike Afghanistan, several other Muslim countries do not prohibit digital resources, including the United Arab Emirates, Qatar, and Bahrain.

See: BSV Global Blockchain Convention Panel, Blockchain in the Middle East and South Asia

New to Bitcoin? Check out CoinGeek Bitcoin for beginners section, the definitive resource guide to learn more about Bitcoin – as originally designed by Satoshi Nakamoto – and blockchain.

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