The Taliban’s Crypto Paradox: Banned for civilians, crypto remains popular among terrorist leaders

Afghanistan’s financial landscape has been in turmoil since the Taliban’s takeover in August 2021, with economic sanctions, frozen reserves, and the collapse of the U.S.-backed government pushing the nation further and further into crisis. 

For many Afghan people, cryptocurrency became a crucial lifeline which offered them the means to bypass a collapsing banking system, and retain connection to the global financing networks around them. 

On 08/12/2024 a video surfaced on X depicting Taliban members discussing with the videographer their meme-coin preferences and successes on crypto. Source

In mid-2024, the Taliban imposed an official ban on crypto trading, defining it as ‘haram; under the interpretation of Islamic law. However, Taliban members have been quietly trading in cryptocurrency - creating a staggering contradiction that has captivated the local and international crypto community. 

Cryptocurrency: A solution to Afghanistan's Financial Crisis?

The national banking system in Afghanistan has virtually collapsed since the Taliban’s recent return to power. With the foreign reserves frozen and international aid cut off, the ATMs have run dry, with little money available to withdraw from machines. It is no wonder that some Afghan people have returned to cryptocurrency as an alternative, particularly their ability to bypass traditional banks. 

24-year-old Afghan crypto trader, Syawash recalled in an interview by the Liberty Star Dispatch , how cryptocurrency has become a lifeline, ‘helping people survive’. With the banking system generally not functioning, digital currency offered a low-cost way to send money overseas and evade the country’s cash shortages. 

The Taliban ‘Talibros’ and their consequences

It was not long until the Taliban recognised this boom in cryptocurrency. Keen to take advantage, while preventing others from doing so, the Taliban decreed digital currencies as ‘haram’. The use of cryptocurrency rose among these ‘Talibros’ while every effort was made to prevent others from utilising decentralised finances. Some Taliban members are reportedly trading meme coins such as Shiba Uni (SHIB) and Dogecoin (DOGE) , highlighting the start contrast between the group’s public anti-crypto stance, and their private trading choices. 

The government of Afghanistan officially banned all cryptochange activity, citing concerns over fraud and the facilitation of illicit activities.  Perhaps to validate these rumours, the Taliban detained several forex dealers, suspected of committing crypto scams.

Despite such a crackdown, some Afghan traders continue to operate underground. Many exchanges operate in the shadows, especially those in Kabul and other large cities, using a P2P (peer to peer) model . Customers come in person to visit these exchanges and make transactions. 

Nominis’ analysis: what does this mean for crypto compliance? 

With the country’s economic instability and the Taliban’s crackdown on crypto, many transactions are now taking place ‘behind closed doors’, whether through peer-to-peer exchanges in person, or using anonymous wallets to hide identities. 

Given the Taliban’s alleged involvement in crypto trading, our main concern as a crypto compliance company is the possibility for wallets to be linked to terrorist organisations or sanctions individuals. Monitoring these activities is of utmost importance because any interaction with these wallets could risk the reputation or finances of businesses. 

The growing use of encrypted apps such as Telegram and signal to facilitate crypto trading has made the identification of suspicious patterns becomes more difficult. Leveraging advanced screening tools to detect illicit transactions, such as behavioural analysis and cross-chain tracking, can ensure that client’s funds are not inadvertently sent into the hands of malicious actors. 

The growing use of crypto among terrorist groups such as the Taliban serve as a strong reminder of the threats that can exist in the cryptocurrency space, and ever-growing importance of compliance as the use of crypto changes and evolves depending on those who use it.

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