(Bloomberg) -- A crackdown by the Taliban has led to a collapse in cryptocurrency use in Afghanistan following a surge last year when the nation was cut off from global banking and international aid, according to a study.
The value of crypto received in the country has fallen to an average of less than $80,000 a month since November, down from a peak of more than $150 million in September last year just after the Taliban swept back to power, according to a report by blockchain research firm Chainalysis.
“The Taliban’s crackdown has had a massive chilling effect on the country’s crypto markets,” according to the report, which added that “crypto dealers are left with three options: flee the country, cease operations, or risk arrest.”
Afghans turned to virtual coins as a lifeline to receive foreign remittances and donations, as well as to shield savings from the Taliban, who were shunned internationally after taking charge in the wake of a chaotic US withdrawal.
In August, the regime imposed a nationwide ban on crypto, calling it “haram” -- or sinful business. The Taliban arrested 13 crypto dealers who defied orders to stop trading digital tokens. They were later released on bail pending trial.
Chainalysis said Afghanistan has dropped to the bottom of its crypto adoption index after placing 20th last year.
The Middle East and North Africa crypto market overall is relatively small but among the fastest growing, according to the researcher: Users there received $566 billion in crypto from July 2021 to June 2022, up 48% from a year earlier.
©2022 Bloomberg L.P.