Why Bangladesh should rethink its Crypto ban
The first light over the Buriganga breaks in bronze ripples, catching the hulls of wooden launches that have ferried commerce for centuries-yet on those same decks young traders now scroll price charts for assets their own government has declared forbidden. Since Bangladesh Bank's September 2022 circular re-affirmed that "virtual currencies or assets are not permitted" under the Foreign Exchange Regulation Act of 1947, the nation has rowed against a tide that is swelling elsewhere. Globally the crypto-asset market, once dismissed as a speculative side-show, is again worth more than US $2 trillion, buoyed by the launch of spot Bitcoin ETFs in New York and a blossoming stable-coin economy stretching from São Paulo to Seoul. Ten other countries still enforce full bans, but most peers have shifted to "regulate, not prohibit," persuaded by the economic mathematics of remittances, online labour, and next-generation fintech. For Bangladesh-ranked among the world's ten largest recipients of migrant income-holding that line risks forfeiting hard currency, talent, and future relevance in the digital marketplace.
Consider the diaspora dividend. Official figures show Bangladeshi workers remitted US $23.9 billion in FY 2023-24, a ten-per-cent year-on-year surge that helped families cushion food-price shocks and service rural micro-loans. Yet the World Bank's Remittance Prices Worldwide portal still lists an average corridor cost of ?6 % for South Asia, double the UN Sustainable Development Goal of three per cent. If even one-third of those transfers migrated to audited USD-backed stable-coins carrying a 1.5 % fee, Bangladeshi households could retain roughly US $360 million a year-more than the annual development budgets of several public universities. That money would not sleep under mattresses; it would circulate through grocery stalls in Rangpur, machine-shops in Gazipur, and tuition fees in Mymensingh, widening the consumption base on which VAT and income-tax collections ultimately depend. A total ban diverts such flows either back to costlier conventional wires or deeper into hawala channels invisible to regulators, forfeiting both savings and oversight.
The logic extends to Bangladesh's quietly booming freelance sector. Payoneer's 2025 index ranks the country eighth in global online-labour earnings, with a 26 % growth rate-second only to India among lower-middle-income economies. Yet seasoned developers and graphic artists report net fees of 7-9 % plus two-week delays when withdrawing dollars through legacy payment processors. Many platforms now offer US-dollar stable-coin payouts that settle in minutes for pennies. Denied legal on-ramps, Bangladeshi freelancers move their profiles to addresses in Dubai or Kuala Lumpur, syphoning intellectual property-and tax potential-out of Dhaka's jurisdiction. Licensing a handful of domestic exchanges under strict KYC/AML rules could keep that revenue at home and feed the Central Bank's foreign-exchange coffers.
Those coffers are thinner than policymakers would like. Bangladesh Bank data pinpoints official reserves at US $20.5 billion in May 2025, down from nearly 27 billion a year earlier, despite the introduction of a crawling-peg regime to slow taka depreciation. At the same time the World Bank notes the Bank's interventions drained almost US $4 billion in the first eight months of FY 24. Tokenised T-bill pilots in Singapore and the UAE show how regulated, on-chain short-term securities can widen foreign-investor participation without immediate convertibility risk. Prohibition prevents Bangladesh from even rehearsing such instruments in a sandbox, while neighbours like India and Pakistan study wholesale Central-Bank Digital Currencies (w-CBDCs) that can mesh with private tokens yet preserve sovereign control.
Critics will retort that crypto also invites volatility, scams, and capital flight-and they are right. But the IMF-FSB synthesis paper delivered to G-20 finance ministers in September 2023 outlines twelve policy pillars, from licensing and custody standards to cross-border information-sharing, that transform those risks into manageable parameters rather than existential threats. India provides a regional template: a flat 30 % tax on digital-asset gains curbed froth yet preserved lawful innovation; its exchanges now report granular data directly to the tax authorities. Nigeria, after double-checking money-laundering patterns, reversed its own ban in late 2024, citing the need for "regulatory capture, not regulatory vacuum." Bangladesh, endowed with a technologically literate central bank (its National Blockchain Strategy was drafted back in 2020), is more than capable of enacting similarly tiered safeguards.
The upside of such prudence is tangible: the Chainalysis 2024 Global Crypto Adoption Index lists seven CSAO countries in the top twenty, with India #1, Indonesia #3, Vietnam #5, and the Philippines #8. Each of those economies logged record remittance inflows and hosted venture capital for Web3 start-ups in 2024. Meanwhile Bangladesh's brightest Solidity programmers depart for Bangalore or Dubai, taking with them what economists call "brain-currency." A modest domestic Web3 corridor-ring-fenced wallets, capped retail exposure, mandatory key escrow inside Bangladeshi data centres-could, according to conservative ASEAN multipliers, generate 15,000 skilled jobs and US $800 million in yearly value-added exports by 2030. That is not utopian speculation; it is a slice of a regional pie already baking next door.
Nor must a crypto thaw undermine Bangladesh Bank's own digital-taka ambitions. The Bank's strategic plan for FY 24-26 includes feasibility studies for a retail CBDC designed to streamline subsidy disbursement and clamp down on grey-market dollars. Global evidence suggests CBDCs flourish when they interoperate with carefully licensed private tokens: Brazil's drex, Singapore's Ubin+, China's digital yuan in Hong Kong. A parallel network of supervised stable-coins could let Bangladeshi exporters, e-commerce firms, and migrants swap e-taka for dollar tokens under the central bank's watchful eye-amplifying monetary sovereignty rather than diluting it.
Quantitatively the calculus is stark. Trimming 4.5 percentage points off the average remittance fee preserves ?US $1.1 billion over three years. Capturing a 0.5 % slice of global Web3 venture flows (US $14 billion in 2024) nets another US $70 million in FDI. Add India-style tax on exchange gains and a digital-asset sandbox fee, and the annual fiscal upside comfortably clears US $1 billion-a figure that dwarfs projected enforcement costs of an outright ban, which include digital-forensics outlays, court backlogs, and the intangible but real erosion of investor sentiment.
So what might a uniquely Bangladeshi middle path look like? First, a regulatory sandbox under the Securities and Exchange Commission, capped at US $50 million total volume and open to diaspora remittance corridors. Second, licensed exchanges restricted to approved fiat-backed stable-coins and tokenised T-bills, with customer keys stored in FIPS-certified hardware within Dhaka. Third, graduated tax slabs-seven per cent on first-yearrealised gains, scaling to twenty per cent above a threshold-to fund a sovereign innovation trust. Finally, mandatory on-chain analytics agreements with compliance firms so Bangladesh Bank receives live dashboards of flows, addresses, and risk scores. The tools exist; the question is whether policymakers choose to wield them.
Jibanananda Das dreamed of a Bengal where golden paddy fields soaked up the evening sun; in the twenty-first century those paddies are cross-hatched by fibre-optic lines and microwave towers. Value now moves at the speed of light, and nations that station tollbooths on that traffic will fund their futures; those that erect barricades risk watching prosperity ripple away like a boat they failed to board. Crypto is not an ideological banner but a technological current, as unstoppable as emails once seemed in the fax era. Bangladesh, resilient and ambitious, can steer with prudent sails rather than chain itself to the dock.
Source:
https://www.observerbd.com/news/534940
