Afghanistan’s On-chain Activity Down 99.9% Since Taliban Takeover

The crypto market in Afghanistan has crumbled since the Taliban retook control. According to a research report by Chainalysis, the on-chain activity in the country has seen an unprecedented decline of 99.9% in less than a year.

Afghanistan Ranks Worst in 2022 Crypto Adoption Index

Crypto activity in Afghanistan has plummeted under the Taliban reign, new data by Chainalysis shows. The blockchain analysis firm reported that the value of crypto received in Afghanistan is down to less than $80,000 per month now, from $150 million in September of 2021, shortly after the Taliban took over.

“We find that in August and September – right after the Taliban’s takeover – Afghanistan’s on-chain activity spiked to a temporary high before taking an unprecedented nosedive.”

This marks a nearly 100% decline in on-chain activity as new leadership left a “massive chilling effect” on Afghanistan’s crypto markets, the report states. As a result, crypto traders in the country can either “flee the country, cease operations, or risk arrest.” Afghanistan was ranked 20th in the Chainalysis 2021 crypto adoption index and has now fallen to the last spot.

Part of the $80,000 in on-chain activity comes from a group of young individuals who have just a few hundred dollars to invest in crypto, said a source familiar with the matter. However, the majority of that figure comes from money laundering and other illegal activities, they added.

The slump comes after the Taliban seized control of Afghanistan and announced a nationwide ban on crypto. Earlier in 2022, local media outlets reported that the Taliban shut down at least 16 crypto exchanges in the country.

The police said the closures come because crypto trading caused “lots of problems” to Afghanistan people, referring to fraud and scams. As such, it is better for Afghanistan people not to trade digital currencies because they are not familiar with them, the Herat police chief added.

The Middle East and North Africa (MENA) are the Fastest-Growing Crypto Markets

The Afghanistan crypto activity figures represent a part of Chainalysis’ broader market research report of the Middle East & North Africa (MENA) region. According to the firm, MENA is one of the smallest but also the fastest-growing crypto markets in the 2022 Global Crypto Adoption Index.

Three countries within the MENA region were among the top 30 in this year’s index, including Turkey (12), Egypt (14), and Morocco (24). Chainalysis reported the volume of crypto received in MENA jumped 48% between July 2021 and June 2022.

Surprisingly, the no.1 country in terms of crypto adoption was Vietnam, followed by the Philippines, Ukraine, India, and the United States.

This article originally appeared on The Tokenist