The Taliban has imposed a nationwide ban on cryptocurrencies and has begun arresting Afghans who defied the ban.

Sayed Shah Saadaat, head of criminal investigations at the police headquarters in Herat, disclosed to Bloomberg that Afghanistan’s central bank imposed a nationwide ban this month. 

“The central bank gave us an order to stop all money changers, individuals, and businesspeople from trading fraudulent digital currencies like what is commonly referred to as Bitcoin,” Mr Saadaat said. 

He added that 13 people were arrested, most of whom were released on bail, and over 20 crypto-related businesses have been shut down in Herat, Afghanistan’s third-largest city. 

Afghans quickly adopted crypto to move money in and out of the country after the Taliban reclaimed Afghanistan. 

World powers shut the middle eastern government out of SWIFT, the global banking system, in line with sanctions levelled on the militant group. 

Last year, the data firm Chainalysis ranked Afghanistan 20 out of the 154 countries it evaluated in terms of their crypto adoption.

The United States stopped transfers of dollars to Afghanistan’s central bank and seized its $7.1 billion in assets. 

France and Poland-based firms with contracts to print Afghan currency also halted shipments following the start of the new regime in Afghanistan.

In February, the Taliban said they would consider whether digital tokens are allowable under Islamic financial practices. 

Afghanistan has now joined China, which declared all crypto transactions illegal in September 2021. 

The declaration of crypto trading as “fraudulent” mirrors the sentiment of Indonesia’s National Religious Council, which forbIds cryptocurrency for Muslims, stating that the digital currency does not follow Sharia tenets and should not be used by Muslims.

The council’s head of religious decrees, Asrorun Niam Sholeh, said crypto had elements of uncertainty and harm, forbidding it as a payment option under Sharia law.