Afghans Want to Use Cryptocurrency to Preserve Their Wealth: Neither Jewelry Nor Cash

Afghans buy cryptocurrency from local brokerage companies, which use P2P methods of foreign accounts to buy digital assets.

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Despite the recent trend of access to cryptocurrencies in developing countries, it is not easy to buy digital assets such as bitcoin, Ethereum and stable currency in countries such as Afghanistan. Since the Taliban seized power in the country last August, the sanctions launched by the United States have prevented domestic funds from being transferred to international financial institutions. At the same time, due to the country’s monetary and political instability, Afghans choose a stable currency rather than their previous preferred assets such as jewelry or cash.

Brokerage Companies Act as Intermediaries for Cryptocurrency Transactions

The comprehensive sanctions that paralyzed the Afghan economy have sparked a surge in interest in holding digital assets in the country as people try to protect their wealth. Considering that the banking network with other countries has been closed, no Afghan bank can trade with major exchanges such as binance and coinbase.

Maihan, a brokerage firm based in Herat, Afghanistan’s third largest city, has emerged as an alternative for locals. As an intermediary, it helps customers buy mainstream cryptocurrencies such as bitcoin and stable currency.

According to Bloomberg, Maihan uses the “hawala system”, an informal method of remittance that accounts for 90% of transactions in the country and allows Afghans to hold cryptocurrencies.

The company sends funds such as dollars to their foreign contacts, who buy digital tokens for them and transfer assets to their binance wallet.Afghan customers can take their money to Maihan and get tether, bitcoin or other digital currencies. The brokerage firm charges a 1.5% fee for each transaction and reserves a cash supply for those who need to sell assets.

Habibullah Timori, founder of Maihan, pointed out that people choose cryptocurrency rather than cash and jewelry to preserve wealth in a crisis, which leads to higher interest in stable currency than other digital assets such as bitcoin.

According to the report, the company’s monthly revenue ranges from $16000 to $20000.

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Prospects of Cryptocurrency in the Country

There is still uncertainty about how the theocratic government will decide on the future of cryptocurrency. The regime has previously revealed that it is considering accepting the option of cryptocurrency, but it may also find it unacceptable under Islamic law.

According to Timori, the Afghan government has suppressed some cryptocurrency miners, but not because they are mining bitcoin. It is reported that the Taliban set fire to the miners only because they thought the Americans used them to monitor the country.