Cryptocurrency and its future in Bangladesh

Written By: Azmain Bin Rashid and Sayma Akhter Jafrin

The concept of Crypto Currency:

Cryptocurrency, sometimes known as crypto-currency or crypto, is any type of digital or virtual currency that employs encryption to safeguard transactions. Cryptocurrencies are digital or virtual currencies that rely on cryptography technologies to function. They enable safe online payments without the involvement of third-party middlemen. Cryptocurrencies promise to make it easier to move payments directly between two entities, eliminating the requirement for a trusted third party such as bank or credit card firm. Bitcoin was the first cryptocurrency, and it is still the most well-known today. Much of the interest in cryptocurrencies is speculative, with speculators driving prices high at times.

Cryptocurrency can be used to buy everyday products and services, but most individuals invest in cryptocurrencies in the same way they would in stocks or precious metals. While cryptocurrency is a novel and exciting asset class, purchasing it can be risky. Therefore, it is highly necessary to undertake extensive research to understand how each system works fully. Cryptocurrencies can be purchased using cryptocurrency exchanges like Coinbase, Kraken, or Gemini. These allow you to trade some of the most prominent cryptocurrencies, including Bitcoin, Ethereum, Ripple, Litecoin, and Dogecoin. These may, however, have restrictions. It is needed to check if the exchange provides the cryptocurrency combination that you are looking for.

How to Invest in Cryptocurrency:

Crypto investments are available on several brokerage platforms, including Robinhood, Webull, and eToro. Additionally, there are crypto exchanges such as, USD Coin, a crypto stablecoin, to purchase Ethereum on Coinbase Exchange. Investments in cryptocurrencies can be profitable. Over the past ten years, the value of cryptocurrency markets has surged, reaching approximately $2 trillion at one time. As of May 2022, Bitcoin had a market value of more than $550 billion (CoinMarketCap. “Bitcoin Price).

One of the most well-known applications for cryptocurrencies is the remittance industry. Cryptocurrencies like Bitcoin are now used as intermediary currency to speed up cross-border money transactions. Thus, fiat money is exchanged for Bitcoin (or another cryptocurrency), sent across international boundaries, and then exchanged back for the destination fiat currency. The procedure of sending money is simplified and made more affordable with this technique. Cryptocurrency is plainly advantageous as a currency and has limitless potential. For instance, after being forced to flee the Russian invasion in 2022, many Ukrainians resorted to Bitcoin. Many people would not have had enough money to exist without cryptocurrencies.

Crypto and The Current Situation in Bangladesh:

The emergence of Cryptocurrency has created a new financial stature for the whole world. Countries embracing Crypto have had a massive positive impact on their citizen’s livelihood. Again, the global market of Crypto is worth more than 2 trillion Dollars and it is expected to reach more than 5 trillion dollars in the next 2-3 years (CoinMarketCap, 2022). Even after having so much expansion and recognition across the whole world, Bangladesh is yet to accept it as Crypto is still illegal in Bangladesh. There are two main reasons behind the Government of Bangladesh still not legalising Crypto. First, the volatility of value of crypto and second, the lack of traceability connected with it. The unpredictable nature of Crypto has already made tonnes of people’s financial positions suffer a lot, and the Government of Bangladesh is afraid that it might create a really bad impact on Bangladesh.

With a hostile view toward crypto, government has made Crypto illegal according to the Foreign Exchange Regulation Act (Freemanlaw, 2022). The act also states that anyone being associated with Crypto in Bangladesh will face serious consequences under the Foreign Exchange Regulation Act, 1947; Anti-Terrorism Act, 2009; and the Money Laundering Prevention Act, 2012 (Bangladesh Bank, 2017). Recently a senior officer from Bangladesh Bank stated in his interview with The Business Standard, “An instruction regarding the issue was made earlier through a circular. The latest circular clarifies it in detail. All banks, non-banking financial institutions and mobile financial service providers such as bKash and Nagad are prohibited from exchanging, transferring, or trading virtual assets and currencies,”

The Prospect of Cryptocurrency Coming to Bangladesh:

The way the European countries have adapted to Crypto in a span of just eight years, shows the interest of people in Crypto. United States, United Kingdom and Australia are three of the top countries which have adapted to Crypto in this world (Gailey, 2022). Countries like India and Pakistan are also in the race of fastest growing Crypto users’ nations. Most consumers also view cryptocurrencies as a means of improving financial inclusion to underbanked and underserved populations. The people of these countries have shown their fair share of interest behind bringing in Crypto. As the situation stands right now, the demand of Cryptocurrency will keep on growing more in future. Most of the gen Zs of Bangladesh are aware about the concept of Crypto and the generation alpha are literally spending their teenage and toddler days in the age of Crypto. The increasing participation in business competitions which are based on Block-chain shows how much the next generation is interested to be a part of the Crypto world. As most of the countries are adapting to NFTs (Non-fungible tokens) and DeFi (Decentralised Finance), the Government of Bangladesh should give a proper thought about the future possibilities of Crypto in Bangladesh (Gailey, 2022).

Recommended Policies:

With the growing nature and global adaptation of Cryptocurrency, it seems that there will be a time when the Government of Bangladesh may have no other option apart from legalising Crypto in Bangladesh. The Government needs to be prepared with policies to make sure that they are ready for the time. The policies need to be polished enough to ensure that it doesn’t hamper the economy of the nation along with making the citizens of the nation suffer with restrictive financial laws (Musa, 2021). The recommended policies are-

  • There should be a minimum financial balance set for the people who want to invest in Crypto. By doing this, the people who’ll be eligible to invest in Crypto will be able to afford the loss if anything goes south. For example, only people having a net worth of 5 million BDT can invest in Crypto.
  • A particular percentage of net worth will be set for the people who are eligible to invest in Crypto. By doing this, the volatile nature of Crypto won’t affect the eligible to invest in Crypto highly. For example, a person can only invest 25% of his net worth in Crypto.
  • All the Crypto deals must go after the authorization of the Government of Bangladesh and the government will directly monitor all the transactions related to Crypto to ensure that there is no illegal use of Crypto in Bangladesh. This can be done by providing a certification code or integrating blockchain in the process.

In the era of NFTs and Block-chain, Crypto can bring a massive change in the financial situation of Bangladesh. However, the above-mentioned recommendations need to be considered by enforcing all the laws with utmost sanctions and authorization.

Featured Image Courtesy: Simplilearn


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