Bangladesh’s government is reluctant to use cryptocurrencies

There are also unique forms of currency in addition to the common currency used in many nations such as the United States, Singapore, Thailand, and the United Arab Emirates. We refer to this as a cryptocurrency or digital currency. Nevertheless, Bangladesh has not yet adopted this currency, even though it has been launched in numerous wealthy and developing nations. Even so, the government has many justifications for this. Let’s investigate the reasons behind the Bangladeshi government’s reluctance to adopt electronic currencies such as Bitcoin.

There are numerous reasons why the nation has not adopted electronic currency, but most of them have to do with security, financial, and legal concerns.

1. Policy and Legal Obstacles

Legal hurdles make Bangladesh cautious about cryptocurrencies. | Photo: Collected.

The legal and policy obstacles come first. The Foreign Exchange Regulation Act of 1947 governs Bangladesh’s financial laws. Under this Act, no cryptocurrency or digital currency is regarded as legal tender. This regulation states that although domestic foreign exchange transactions are permitted, there is no legal justification for advancing cryptocurrencies to that level. As a result, the nation does not accept digital currencies such as Bitcoin, Ethereum, or others for transactions or investments. According to the nation’s legal system, Bitcoin is an uncontrolled currency, and transactions involving it are considered unethical.

2. The danger of criminality and money laundering

Cryptocurrency poses money laundering and crime risks, raising concerns for Bangladesh. | Photo: Collected.

The risk of criminality and money laundering is increased when cryptocurrencies are used. The central bank of Bangladesh, Bangladesh Bank, has issued numerous warnings about the potential for organized crime to use cryptocurrency. It is comparatively simple to use cryptocurrencies for money laundering and terrorist financing due to the decentralized nature of the transaction system and the potential for anonymous transactions. since these financial exchanges are easily transnational and outside the jurisdiction of any one nation or authority. As a result, if it is implemented in Bangladesh, financial security might be under threat. It directly violates the Anti-Terrorism Act of 2009 and the Money Laundering Prevention Act of 2012. These will be regarded as significant offenses under several statutes.

3. Volatility in prices and financial risk

For the nation, price fluctuations or instability in cryptocurrencies are regarded as a serious concern. The market often sees significant volatility in the value of cryptocurrencies, which puts investors at risk. Since cryptocurrency has no inherent value and is not controlled by a sovereign state or government, Bangladesh Bank has classified it as extremely hazardous. The nation’s economic stability could so be in jeopardy. This explains the government’s reluctance to support cryptocurrency adoption in the nation.

4. Cryptocurrencies’ decentralized structure and absence of governmental oversight

Financial control and the nation’s economic structure are highlighted by the Bangladeshi government. The administration hopes to preserve the transparency of financial operations by taking this action. Cryptocurrency cannot be regulated by the government since it is decentralized. Bangladesh Bank asserts that every economic system must be governed by the state, which runs counter to the idea of cryptocurrencies. This could raise the risk of financial crime in the nation.

5. Possibility of fraud

The prevalence of fraud is dangerously rising along with the global increase in cryptocurrency use. Such frauds have caused cryptocurrency investors to lose money, which has further disturbed the Bangladeshi government.

Fraud risks in cryptocurrencies heighten government concerns in Bangladesh. | Photo: Collected.

Even though cryptocurrencies are prohibited in Bangladesh, the government is reportedly mulling the introduction of Digital Taka, a digital currency backed by the central bank. As opposed to decentralized cryptocurrencies, this money will contribute to the nation’s financial stability under governmental authority. Because it will be part of a regulated financial framework, stakeholders think that digital money will help mitigate the dangers associated with cryptocurrencies and be helpful for electronic transactions within the nation.

To preserve economic stability, stop illicit activity, and keep financial control of the nation, the Bangladeshi government primarily banned cryptocurrencies. Bangladesh is firmly opposing cryptocurrencies in light of its financial security and safety, even though they are legal in many other nations.

“References”