Afghan citizens are turning to stablecoins to protect their finances as fears of a Taliban crackdown on wealth grow.
Citizens are worried that the Taliban will seize assets, which would worsen an already declining economy. And the focus of their investments is not bitcoin, but rather stablecoins.
The idea is to have their wealth pegged to fiat currencies. Executives from the country’s crypto exchanges note that demand is high, and people are no longer storing wealth in cash or jewelry, preferring crypto instead.
Afghan citizens also say that the Taliban is raiding homes and seizing belongings, prompting the switch to cryptocurrencies. Reports from earlier in the year also corroborate this mass adoption of crypto. Some in Afghanistan have used their crypto holdings to flee to Pakistan.
The U.S. has blocked $9 billion in foreign-exchange reserves, the economy is on the brink of collapse, with people only allowed to withdraw $400 a week
Afghanistan ranks in top 20
In 2021, Afghanistan was ranked 20th among 154 countries in Chainalysis’ Crypto Adoption Index, one of several countries facing economic problems. Just one year before, the company considered Afghanistan’s crypto presence to be so minimal it did not even rank.
This isn’t the first time that a country’s citizens have taken to crypto to protect their finances. Venezuela and Argentina are among those most commonly cited examples of crypto helping a country’s citizens. Both countries have experienced a surge in crypto usage following economic downturns.
And in Myanmar, the government in exile has recognized Tether as an official currency as it seeks to fund a campaign to topple the military junta that seized power last year
Ukraine has received tens of millions in donations in the form of cryptocurrencies. Crypto has proven to be a lifeline for millions and can be an effective way to fight repression and economic hardship.