Afghans Seeking Refuge in Cryptocurrencies as Taliban’s Takeover Causes Economic Turmoil

Some Afghans are relying on holding cryptocurrencies amid the economic turmoil triggered by the Taliban’s hostile takeover.

CNBC media outlets recently had conversations with some Afghan crypto users who revealed an inciting trend taking shape within the country.  Farhan Hotak, a 22-year old Afghan, spoke to CNBC, said that he has been holding his cryptocurrency on the Binance exchange.

Musa Ramin, 27, another Afghan national, also disclosed to CNBC that he had invested a portion of his net worth into cryptocurrencies days before the Taliban entered Kabul. Ramin stated that he first invested in cryptocurrencies after massive losses after the afghani currency plunged its value due to the Covid-induced global economic downturn. “That is when I discovered bitcoin,” he said.

Hotake and Ramin are among few Afghans protecting their savings from the currency onslaught triggered by the Taliban’s regime takeover. They have invested in cryptocurrencies to safeguard them from rapid currency deprecation. Afghanistan’s currency has plummeted drastically after the Taliban took control of the nation.

The Taliban recently overthrew the Afghanistan government and caused a crisis that has left many people facing financial ruin because of bank closures, cash shortages, and the suspension of international money transfers like major remittance providers such as MoneyGram and Western Union.

The US has also frozen around $9 billion in central bank reserves. The devaluation of the afghani currency has seen the prices of basic goods and services increase in Afghanistan. Economic experts have warned that Afghani citizens could suffer more due to hyperinflation risks facing the country.

The decentralised nature of crypto assets such as Bitcoin makes it an attractive option for Afghan citizens who want to store their savings or move funds abroad. The fixed supply of Bitcoin makes it intrinsically anti-inflationary. 

Some crypto users in Afghanistan have even called for introducing a “Bitcoin standard” to ensure Afghanistan’s sovereignty.

Janey Gak, who identifies herself in social media as “Bibi Janey online, created a Facebook page in 2018 to assist in encouraging Bitcoin adoption and spreading awareness.

After the Taliban took over the Afghan government recently, Gak tweeted: “In order to be a truly sovereign state, the Islamic Emirate of Afghanistan must: not join the UN nor allow their agencies to operate in the country; never borrow money; adopt a bitcoin standard.”

Taliban Causes Chaos

Cryptocurrency investment is a relatively new concept in Afghanistan, but the nation has witnessed rapid adoption of virtual assets in 2021.

On August 18, the Chainalysis blockchain data platform released the 2021 Global Adoption Index that ranks Afghanistan 20th position out of 154 countries ranked in the index. That is a huge improvement for Afghanistan as the country did not appear on the list in 2020. The index further ranks Afghanistan 7th position based on its increased peer-to-peer (P2P) exchange trade volumes.

Data from Google trends indicates that searches for terms like “Bitcoin” and “crypto” have increased sharply in July, just weeks before the Taliban coup in Kabul. Google data shows that more Afghans began investing in crypto assets this year, probably due to fear of an economic crisis as the Taliban started its pursuit of taking control over the nation.

On August 15, Taliban fighters took control of the Afghan presidential palace after Afghanistan President Ashraf Ghani fled the country. The Taliban seized power in Afghanistan two weeks before the US planned to complete withdrawal of its troops after a costly two-decade war.

The insurgents stormed across Afghanistan, capturing all major cities within a few days, as Afghan security forces equipped and trained by the US and its allies left the country.

The Taliban, a militant group that ran the nation in the late 1900s, retook control of the country.

Afghan citizens are fleeing the country because they are worried that the nation could plunge into chaos or the Taliban could carry out revenge attacks against those who worked with the Americans or the government.