In the era of NFTs and blockchain, crypto can usher in massive changes to the financial industry in Bangladesh. But first, effective laws and their enforcement must be ensured
Cryptocurrencies are digital or virtual currencies that rely on cryptographic technologies to function and use encryption to protect transactions. They allow secure online payments without the intervention of third-party intermediaries. Bitcoin was the first of its kind and remains the best known to this day.
The emergence of cryptocurrency has created a new financial structure in the world. Countries that embrace crypto have had a massive impact on the livelihoods of their citizens. The global crypto market is worth over $2 trillion and it is expected to grow to over $5 trillion in the next two to three years (CoinMarketCap, 2022).
Some policymakers and economists see cryptocurrencies as a way to improve financial inclusion for underbanked and underserved populations.
How Western countries have adapted to crypto in just eight years reflects how much people are interested in crypto.
The US, UK, and Australia are the top three countries that have adapted to crypto. Countries like India and Pakistan are also in the race for the fastest growing crypto nations.
Despite such expansion and recognition across the world, Bangladesh has yet to accept it, and cryptography is still illegal here. There are two main reasons behind the government’s decision not to legalize cryptocurrency.
The first is the volatility in the value of crypto and the lack of anonymity associated with it. The unpredictable nature of crypto has already affected tons of financial situations, and the government fears that this will have a very negative impact on the economy of Bangladesh.
With a hostile view towards crypto, the government has made crypto illegal according to the Foreign Exchange Regulation Act. The law also states that anyone associated with crypto in Bangladesh will face severe consequences under the Foreign Exchange Regulation Act 1947; Anti-Terrorism Act, 2009; and the Prevention of Money Laundering Act 2012 (Bangladesh Bank, 2017).
Nevertheless, the people of Bangladesh have also shown their fair share of interest in cryptocurrency. Moreover, the growing blockchain-based business competition shows how much the next generation is interested in being a part of the crypto world.
As most countries adapt to NFTs (non-fungible tokens) and DeFi (decentralized finance), the government is now considering the future prospects of crypto in Bangladesh (Gailey, 2022).
The path to crypto legalization
With the growing trajectory and global adoption of crypto, the government may have no choice but to legalize crypto in Bangladesh. The government must be prepared with effective policies to ensure that it does not hamper the nation’s economy and hampers the citizens with ineffective financial laws.
First, the government should set a minimum financial balance requirement for people who want to invest in crypto. By doing so, those eligible to invest in crypto will be able to bear the loss if anything goes south. For example, only people with a net worth of 5 million Tk could become eligible to invest in crypto.
Second, people who want to invest in crypto should only be allowed to invest a particular percentage of their net worth in crypto. In doing so, the volatile nature of crypto will not affect them too much. For example, a person might be allowed to invest only 25% of their net worth in crypto.
Finally, the government could require that all crypto transactions receive government authorization. The government could directly monitor all crypto-related transactions to ensure there is no illegal use.
In the era of NFTs and blockchain, crypto can usher in massive changes to the financial industry in Bangladesh. But first, effective laws and their enforcement must be ensured.
How it actually works
Much of the interest in cryptocurrencies is speculative, with speculators sometimes driving prices up.
Cryptocurrency can be used to purchase everyday products and services, but most individuals invest in cryptocurrencies the same way they would in stocks or precious metals.
Although cryptocurrency is a new and exciting asset class, buying it can be risky. Therefore, it is necessary to undertake a fair amount of research to fully understand how each system works.
Cryptocurrencies can be purchased using cryptocurrency exchanges like Coinbase, Kraken, or Gemini. These allow you to trade some of the most important cryptocurrencies, including Bitcoin, Ethereum, Ripple, Litecoin, and Dogecoin.
Crypto investments are available on several brokerage platforms, including Robinhood, Webull, and eToro. Moreover, there are crypto exchanges, such as USD Coin, a crypto stablecoin, to buy Ethereum on Coinbase Exchange.
Investments in cryptocurrencies can be profitable. Over the past 10 years, the value of cryptocurrency markets has surged, reaching around $2 trillion at a time. Bitcoin had a market value of over $550 billion as of May 2022. (CoinMarketCap. “Bitcoin Price)
One of the best-known applications for cryptocurrencies is the remittance industry. Cryptocurrencies such as Bitcoin are now being used as an intermediary currency to speed up cross-border monetary transactions. Fiat currency is exchanged for Bitcoin (or another cryptocurrency), sent across international borders, and then exchanged for the destination fiat currency. The procedure for sending money is thus simplified and made more affordable thanks to this technique.
Sayma Akhter Jafrin is a graduate in economics and finance from the Asian University for Women and also a business and economics research associate at the Youth Policy Forum.
Sayma Akhter Jafrin / Contributor
Sayma Akhter Jafrin / Contributor