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Neither Jewelry nor Cash: Afghans Looking to Crypto for Preserving Their Wealth

Afghans buy cryptocurrencies from local brokerages which use the P2P method with foreign accounts to purchase digital assets.

Despite the recent trend of developing countries gaining exposure to cryptocurrencies, buying digital assets like Bitcoin, Ethereum, and stablecoins isn’t easy at all in countries like Afghanistan.

Since last August, when the Taliban seized power in the country, America-initiated sanctions have crippled domestic funds from being moved to international financial institutions. Meanwhile, due to the nation’s monetary and political instabilities, Afghans choose stablecoins over previously preferred assets like jewelry or cash.

Brokerage as the Intermediary for Crypto Transactions

The sweeping sanctions that have crippled Afghanistan’s economy have caused a surging interest in holding digital assets in the country as people struggle to protect their wealth. Considering that the banking networks with other countries are closed, no Afghan banks can conduct transactions with major exchanges like Binance and Coinbase.

Maihan, a brokerage located in Herat, Afghanistan’s third-largest city, has emerged to provide locals with alternatives. It acts as an intermediary that assists customers in purchasing mainstream cryptocurrencies like Bitcoin and stablecoins.

According to Bloomberg’s reportage, Maihan uses the “Hawala system,” an informal way of money transfer that accounts for 90% of transactions in the country, to let Afghans indirectly hold cryptocurrencies. The company sends money like US dollars to their foreign contacts, which buy digital tokens for them and transfer the assets to its Binance wallet.

Afghan clients can bring money to Maihan and get Tether, Bitcoin, or other digital currencies. The brokerage, which charges a 1.5% fee for every transaction, also keeps a supply of cash on hand for people who need to sell their assets.

Maihan’s founder Habibullah Timori noted that people choose cryptocurrencies over cash and jewelry to preserve their wealth in a crisis, resulting in a higher interest in stablecoins than other digital assets like Bitcoin.

The reportage states that the company’s monthly revenue ranges from $16,000 to $20,000.

The Future of Cryptocurrencies in the Country

There is still uncertainty regarding how the theocracy will rule on the future of cryptocurrency. The regime has previously revealed that it’s looking at the option of embracing crypto, but it may also find it unacceptable under Islamic law.

The Afghan government has imposed crackdowns on some crypto miners, according to Timori, but not because they were mining Bitcoin. The Taliban reportedly has set miners on fire simply for believing Americans used them to spy on the country.