Bangladesh is one of the countries to hold a strict stance against crypto. In 2017, the government declared cryptocurrency illegal and warned against its use. While other countries are pushing forward their crypto regulatory framework, intensifying global competition, Bangladesh took a step back and banned all crypto usage and possession due to the risks of money laundering and financial system instability. 

Were there any Crypto Regulations in Bangladesh? 

While there are no crypto regulations in Bangladesh, the country has established some laws for technological development. 

March 2020- National Blockchain Strategy 

• Released under the guidance of the Bangladesh Computer Council (BCC) to recognize the crucial importance of emerging technologies such as blockchain. 

• It leverages blockchain technology for various government sectors such as land records, identity systems, and e-governance. 

Why is Crypto Banned in Bangladesh?

In 2014, Bangladesh Bank stated, “anybody caught using the virtual currency could be jailed under the country’s strict anti-money laundering laws.” 

• Due to the potential risk of money laundering and terrorism in finance, the Bangladeshi government banned crypto. 

• The decentralized nature of crypto trading in Bangladesh and the use of anonymous wallets like TRC20 make it difficult for the authorities to monitor transactions and trace the flow of money. 

• Experiencing Ponzi schemes and scams in the cryptocurrency space, such as the MTFE scam, which drew thousands of investors into it and theft their money before vanishing. 

• A few years back, Bangladesh Bank told the Criminal Investigation Department (CID) that while owning crypto is not a punishable offence itself but engaging in money laundering or foreign currency violations with crypto must be prosecuted. 

Bangladeshi Government’s Stance on Cryptocurrency 

Despite the government’s strict decision on crypto ban, there is a thriving underground market where individuals engage in crypto trading, and apps like Binance and KuCoin are easily accessible to them through the Google Play Store for crypto trading. The government resolves this unregulated use of crypto in two ways:

• When crypto is purchased using credit or debit cards and endorsed in US dollars, banks track the transaction of funds and potentially identify the individuals involved. 

• Another method involves the local agent to buy and sell cryptocurrencies like Bitcoin and Tether in exchange for Bangladeshi national currency (Taka). They charge a small commission on each transaction, making profits while the investors are lured in the process to think it is valued in US dollars. 

Crypto Tax in Bangladesh 

While crypto is still a grey area in Bangladesh and no specific tax regime has been enacted for it, the National Board of Revenue in Bangladesh treats cryptocurrency as subject to the general tax laws of the country. The Income Tax Ordinance of 1984 applies to all crypto transactions in Bangladesh. 

Possibility of Crypto Regulation in Bangladesh 

There is a mixed reaction to the crypto ban in Bangladesh. While some people choose to avoid it, others urge the government to regulate crypto. Dr B M Mainul Hossain, a professor at Dhaka University, believes banning crypto is not the solution. 

He stated, “Sitting back and doing nothing is not the answer,” he said. “Cryptocurrency is already used in many countries legally. We should also think about how to monitor and regulate it.”

His statement urged the government to start regulating crypto in the country, considering both the risks and the benefits. 

Crypto Adoption in Bangladesh

As crypto is legally banned in the country, pinpointing the exact number of users is impossible. Binance, a crypto platform, reported that it has more than 600,000 Bangladeshi users on its platform. It indicates, if one platform has such a massive number of crypto users in the country, the total number must be significant. 

End note

Despite the crypto ban in the country, people are using it from different sites, including crypto platforms, exchanges, gambling sites, and anonymous wallets, all of which are difficult to trace. It is crucial to question if crypto is banned in the country, then why are such platforms still available for illegal use? The government aims to focus on safeguarding the nation’s financial stability, but it seems impossible to accomplish while people engage in illicit crypto activities.

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