Quick Answer
Cryptocurrency is absolutely banned and illegal in Afghanistan.
- The Taliban regime banned all crypto activities in 2022, declaring them haram (forbidden).
- Enforcement includes arrests and asset confiscation, but underground P2P trading persists.
Legal Status of Crypto in Afghanistan
Cryptocurrency is unequivocally illegal in Afghanistan, with the Taliban regime imposing an absolute ban on all related activities. The government justifies this prohibition on both religious grounds—declaring crypto "haram" under Sharia law—and for economic reasons, aiming to maintain control over the country's fragile financial system. This ban is enforced by Taliban authorities, and while there are no specific crypto regulations, the nation's central bank, Da Afghanistan Bank, has supported the prohibition, and the financial intelligence unit, FinTRACA, oversees general AML/CFT compliance.
Current Regulations
Under the Taliban regime, Afghanistan enforces an absolute ban on all cryptocurrency activities, which has been in place since 2022. The government deems crypto "haram" (forbidden under Islamic law) and a threat to its economic control. Consequently, all trading, mining, and usage are prohibited, with enforcement actions including the shutdown of exchanges, arrests of traders, and confiscation of funds. While enforcement can be inconsistent, the official policy remains one of strict prohibition, making any crypto-related operations illegal.
Regulatory Authorities
Several government and de facto authorities are involved in enforcing Afghanistan's strict stance on cryptocurrency.
- The Taliban Regime: This de facto government enforces the nationwide ban on all crypto activities, including trading and mining. Their authorities conduct crackdowns, shut down exchanges, and arrest individuals involved in the digital asset market.
- Da Afghanistan Bank (DAB): As the nation's central bank, DAB is responsible for supervising financial institutions and has publicly supported the crypto ban by declaring it "haram." While its primary role involves traditional finance, its warnings lend official weight to the prohibition.
- Financial Transactions and Reports Analysis Center of Afghanistan (FinTRACA): This body serves as Afghanistan's Financial Intelligence Unit (FIU), tasked with combating money laundering and terrorism financing. It collects and analyzes financial reports to detect illicit activities, which would include illegal crypto transactions under the current AML/CFT framework.
Historical Context
Following the Taliban's 2021 takeover, crypto adoption surged as a financial lifeline for Afghans amid economic collapse. This period of tolerance ended abruptly with a major policy shift in August 2022, when the regime banned all crypto activities, declaring them "haram" (forbidden). By 2024, authorities intensified enforcement, shutting down exchanges and arresting traders. This crackdown drove the market underground, but it failed to stop usage. Many citizens continue to rely on P2P trading for essential remittances and savings, highlighting a deep conflict between the government's prohibition and the population's economic necessities.
Compliance Requirements for Businesses in Afghanistan
While crypto is banned, any business operating in Afghanistan's financial sector must adhere to strict Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) regulations. Key compliance requirements include:
- Develop a Risk-Based AML/CFT Program: Businesses must implement a comprehensive AML/CFT program with policies and controls to mitigate financial crime risks. This program must be approved by the board of directors and apply across all domestic and international branches.
- Conduct Customer Due Diligence (CDD): Firms must perform robust CDD and Know Your Customer (KYC) checks by identifying and verifying customer identities when opening an account, conducting significant transactions, or if suspicion arises. Ongoing monitoring of business relationships is also mandatory.
- Apply Enhanced Due Diligence (EDD): EDD is required for higher-risk situations, such as complex transactions, dealings with Politically Exposed Persons (PEPs), or transactions involving high-risk countries. For PEPs, this includes obtaining senior management approval and verifying their source of funds.
- Report Key Transactions: Suspicious transactions of any amount must be reported to the Financial Transactions and Reports Analysis Center of Afghanistan (FinTRACA) within three business days. According to compliance requirements, large cash transactions over AFS 1,000,000 must also be reported.
- Maintain Records: A key compliance obligation is to maintain detailed records of all transactions and customer due diligence for at least five years after a business relationship has ended.
- Conduct Audits and Training: The AML/CFT program must be audited at least every two years, and staff must receive sufficient training to understand and perform their compliance duties.
- Prohibit "Tipping Off": Employees are strictly forbidden from alerting a client or any third party that their transactions are being reported or investigated for suspicious activity.
Why this matters for Cross-Border Payments
For businesses managing payments between India and Afghanistan, the country's stringent financial regulations create significant hurdles. The absolute ban on cryptocurrency eliminates a modern channel for fast, low-cost transfers, forcing complete reliance on traditional banking systems. These systems, however, are subject to intense AML/CFT scrutiny, introducing major pain points such as increased compliance overhead, potential transaction delays, and higher operational costs. This combination adds considerable friction and risk for any entity facilitating cross-border payments, making financial operations between the two nations more complex and expensive.
How Lightspark Enables Compliant Crypto-Native Payments
Lightspark offers a suite of tools to modernize global payments. Its core products, Lightspark Connect and Grid Switch, provide access to the 'Money Grid'—a global network built on Bitcoin's Lightning Network. Connect allows businesses to use native Bitcoin for instant transfers, while Grid Switch enables regulated institutions to leverage domestic real-time payment systems for cross-border transactions without directly handling crypto. By using Bitcoin as a universal settlement asset, Lightspark facilitates instant, low-cost payments, bypassing the delays and high fees of traditional correspondent banking.
This infrastructure helps businesses address stringent compliance demands. While not handling regulations directly, Lightspark facilitates adherence by providing audit-ready reporting and integrations for requirements like the Travel Rule and OFAC screening. Features such as flexible custody options and developer-friendly APIs allow regulated entities to build compliant payment flows, reducing the operational friction associated with cross-border financial operations.
To learn more about modernizing your payments, contact Lightspark.
Notice: This article is provided for informational purposes only and does not constitute legal advice.
Sources
- "AML/CFT Compliance Guidelines for Afghanistan." AML Watcher, n.d., amlwatcher.com/our-coverage/afghanistan/.
- "AML/CTF compliance in Afghanistan." NameScan, n.d., namescan.io/coverages/afghanistan.
- Beaumont Capital Markets. "Afghanistan's Crypto Tax Guide for Expats and Digital Nomads." Beaumont Capital Markets, 25 June 2025, beaumont-capitalmarkets.co.uk/afghanistan-crypto-tax-guide-expats-digital-nomads/.
- Chakrawarty, Shweta. "Cryptocurrency Regulations in Afghanistan." Coinfomania, 25 June 2025, coinfomania.com/cryptocurrency-regulations-in-afghanistan/.
- Coin World. "Afghanistan's Crypto Ban Fails to Halt Underground Trading." AInvest, 25 June 2025, www.ainvest.com/news/afghanistan-crypto-ban-fails-halt-underground-trading-2506/.
- Cryptopolitan. "Afghanistan’s Taliban Actively Trades Crypto Memecoins Despite Imposing Nationwide Ban." Binance Square, 22 Dec. 2024, www.binance.com/en/square/post/17906782335442.
- Ruby, Daniel. "Crypto Legal Countries (2025) – Full List & Regulations." DemandSage, 12 Aug. 2025, www.demandsage.com/crypto-legal-countries/.
