DeFi surge under the Sharia – Afghanistan’s crypto trading

Category: Asia Blockchain Crypto

Undercover crypto trading in Afghanistan is surging while economy collapses, Taliban stance remains unclear

It has become a recurrent phenomenon for populations of countries with devalued currencies and virtually halted trade to resort to DeFi solutions. In Venezuela and Iran, individuals were able to salvage at least parts of their fortune through extensive Bitcoin mining, with large parts of the trading happening undercover. In Afghanistan a similar dynamic is commencing, with banks being as devoid of cash as British petrol stations of fuel.

While Coinalysis did not feature Afghanistan in its 2020 Global Adoption Index at all, due to hardly measurable activity, the central Asian country is now ranked 20 of the 154 countries observed in 2021. When only considering peer-to-peer activity, it ranks even higher on seventh place. That is a huge leap.

One would be mistaken however to believe that the crypto scene in Afghanistan is an easy way to escape the collapsed financial system. So far, the Taliban has not made any statements on their stance towards DeFi and many are wary of sudden actions. Crypto traders are not advertising their services and mining is performed in secrecy, disguising trader identity using VPNs for example, as they are anxious of a sudden verdict putting them in danger.

Whether or not crypto is haram (forbidden by Sharia law), has not been decided. The Islamic law of the Taliban states that only goods of intrinsic value can be traded, and if that’s true for crypto has been up for debate among politicians and business moguls ever since the birth of Blockchain. Just that in Afghanistan, it is a matter of life and death, as well as a matter of geopolitical consequences.

So far, individuals are using Bitcoin and Co not only to save their fortunes, but also to resist. Bloggers have been accessing the Swedish marketplace Bitrefill to trade crypto for phone services that have been forbidden, allowing them to provide their audiences with insights on the ground situation.

However, the new regime itself, if it decides that DeFi is in concordance with Islam, could use the technology for itself to circumvent sanctions and strengthen its position.

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