US sanctions on Taliban raises fears of Bitcoin misuse

 The U.S. will freeze nearly $9.5 billion in assets belonging to the Afghan central bank to prevent the Taliban from accessing them.
“Joe Biden” by Gage Skidmore is licensed under CC BY-SA 2.0

Key Takeaways

  • The United States has frozen $9.5 billion in assets belonging to the Afghan central bank.
  • The Governor of Afghan Central Bank broke the news on Twitter.
  • News of freezing of accounts raises fears of Bitcoin miuses by the Taliban.

YEREVAN (CoinChapter.com) — The United States has decided to freeze nearly $9.5 billion in assets belonging to the Afghan central bank, raising possibilities that the terrorist outfit might turn to financial assets that operate outside the purview of Washington. Read Bitcoin.

“Any Central Bank assets the Afghan government have in the United States will not be made available to the Taliban,”

the Washington Times quoted a US official, who spoke on the condition of anonymity. 

The development has increased the threat that the Taliban will misuse Bitcoin and other cryptocurrencies. After coming to power, the Taliban is desperate for funding their operations and governance. 

The Taliban, which remains on the Treasury Department’s sanctions designation list, swarmed to power after capturing Afghanistan’s capital Kabul. 

Since then, the outfit has deposed the US-friendly Afghan government. The President, Ashraf Ghani, has fled to the UAE, which has given the deposed president temporary refuge. 

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Governor of Afghanistan Central Bank breaks the news

The news of the US decision to stop the inflow of USD to Afghanistan came from the horse’s mouth.

Ajmal Ahmady, the Governor of Da Afghanistan Bank (DAB), the country’s central bank, broke the news on Twitter. According to Ahmady, he had received a call on Friday, informing him that there would be no further shipments of USD to Afghanistan. Instead, according to Ahmady, they were expecting a shipment on Sunday, the day the Taliban seized Kabul.

“For the first time, I therefore had to limit USD access to both banks and dollar auctions to conserve remaining DAB dollars.”,  

wrote Ahmady.

The Central Bank governor has since fled the country.

A significant amount of DAB’s $9.5 billion in assets is with the New York Federal Reserve and other U.S.-based financial institutions.

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Afghans fleeing the Taliban run out of USD 

The decision of the US Government to freeze assets belonging to DAB has created an inconvenience for the Afghans fleeing the country.

Out of cash, the banks in Afghanistan found themselves unable to return the citizens’ dollars due to shortages. Desperate to claim their savings from the Taliban, thousands of Afghans had lined up outside the banks for hours. Most of them had to return empty-handed.

Ajmal Ahmady had also brought the news of the USD shortage to the attention of the Afghan President. As a result, president Ghani had secured verbal approval from US Secretary Blinken that the cash would arrive. However, it never did.

The US did not keep its promise, and the Afghan banks, deserted by the Central Bank Governor and the country’s President, were left facing the angry mob.

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IMF suspends Taliban’s access to resources

Following the US administration’s announcement, the International Monetary Fund (IMF) also indicated it might not proceed with $450m in loans to the Da Afghanistan Bank. The IMF had planned to release the loans on 23 August.

“As is always the case, the IMF is guided by the views of the international community. There is currently a lack of clarity within the international community regarding recognition of a government in Afghanistan, as a consequence of which the country cannot access special drawing rights or other IMF resources.

a spokesperson said.

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Fears of Bitcoin misuse rise 

The Governor of the Afghan Central Bank announced that Afghanistan’s international reserves are safe from the Taliban.

While this comes as positive news, it has given rise to fears. For example, how will the Taliban fund their operations without access to finances? 

The answer may lie somewhere innocent, but it does not help prevent fears that the Taliban will turn to crypto.

In ISIS ransacked Syria, the Sunni militant outfit Hay’at Tahrir al-Sham (HTS) had founded the “BitcoinTransfer,” an organization that buys and sells cryptocurrencies for cash.

In August 2020, the US Department of Justice announced that BitcoinTransfer had acted as a central hub in six different terror-funding operations. 

However, Bitcoin Transfer was not the only organization. International investigations revealed that terrorists were becoming increasingly crypto-savvy and catching up with modern technologies. 

There is an established record of crypto misuse by militant outfits. The shortage of cash in the country might prompt the Taliban to turn their attention to Bitcoin and cryptocurrencies. 

While it is too early to assume, the combination of the Taliban and crypto will spell danger.

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