Cryptocurrency is banned in Bangladesh, but its usage is booming in the shadow of a legal grey zone and the absence of effective regulatory oversight. Bangladesh ranks 13th among 151 countries worldwide in terms of cryptocurrency usage, according to the Global Crypto Adoption Index 2025, published by the international blockchain analytics firm Chainalysis. In the index, India ranks first, the United States second and Pakistan third, followed by Vietnam, Brazil and Nigeria. The index shows that despite the legal prohibition on the use and trading of cryptocurrencies, Bangladesh has emerged as one of the leading crypto-using nations in South Asia, ranking third in the region after India and Pakistan.
According to Investopedia, the growth of cryptocurrency from a speculative investment into a recognised asset class has prompted governments worldwide to develop regulatory frameworks. The United States, Canada, the United Kingdom, South Korea, Japan and many other countries allow crypto to operate within regulated frameworks. The European Union recognises cryptocurrencies as crypto-assets rather than illegal instruments.
In South Asia, India and Pakistan do not recognise crypto as legal tender, yet neither has formally outlawed its possession. India has lifted its ban and is now working toward a regulatory framework, while Pakistan is exploring blockchain and digital asset regulations. Japan, Switzerland and Singapore offer examples of balanced oversight that encourage innovation while attempting to curb misuse, raising questions about whether Bangladesh's blanket ban on its use is sustainable.
In Bangladesh, the absence of formal recognition has not prevented crypto activity. Instead, it has pushed the market into informal and largely unregulated channels, increasing risks related to fraud, security and capital flight. Although the country has made notable progress in digital connectivity and mobile financial services, there remains a lack of crypto-related infrastructure, public awareness and blockchain education.
Bangladesh Bank has repeatedly warned against cryptocurrencies, citing concerns over money laundering, terrorism financing and foreign exchange losses. While no law explicitly criminalises crypto ownership, existing regulations under the Foreign Exchange Regulation Act of 1947 and the Money Laundering Prevention Act of 2012 have been interpreted to prohibit such transactions. However, its usage continues to expand. Industry estimates suggest that millions of Bangladeshis hold accounts on international crypto exchange platforms such as Binance, Coinbase and Crypto.com, even though banks are not permitted to facilitate crypto payments.
Chainalysis identifies freelancing and remittances as key drivers. A large segment of Bangladesh's youth is engaged in online freelancing, and many receive payments from overseas clients in cryptocurrencies, particularly stablecoins such as USDT, because transactions are fast and relatively inexpensive. It is also believed that a portion of expatriate remittances is entering the country through crypto-based channels. At the same time, persistent currency depreciation and inflation have encouraged some users to convert savings into dollar-pegged digital assets. Cryptocurrency has also become a popular payment method for online gaming and international betting sites.
Most crypto activity in Bangladesh takes place through peer-to-peer exchanges. As users cannot directly purchase crypto with bank cards, they rely on local intermediaries listed on platforms such as Binance. Money is transferred in taka via banks or mobile wallets, and cryptocurrency is credited in return. Once received, it can be sent globally within minutes through blockchain networks. At the receiving end, holders may retain the asset, convert it into stablecoins or sell it back through local P2P markets. In effect, this system operates as a technology-driven money transfer network. It is kind of digital version of hundi.
The central bank views cryptocurrency as a threat because it is not issued or controlled by any government or central authority. Moreover, its value is highly volatile, and formal recognition carries the risk of encouraging gullible Bangladeshis to invest in crypto assets and suffer losses, just as many already suffered in the stock market. And then, it carries significant risk for money laundering. A recent investigation by the International Consortium of Investigative Journalists and The New York Times found that at least $28 billion in illicit funds flowed into prominent crypto exchanges, like Binance and OKX over the past two years.
Globally, regulators are also struggling with the misuse of digital assets by criminal networks. Hackers, cybercriminal groups and transnational fraud syndicates routinely exploit crypto platforms to move stolen or extorted funds. These concerns are legitimate. However, daily transactions continue to rise.
Faced with such a quandary, countries are increasingly moving away from imposing outright bans on cryptocurrency. Instead, they are focusing on regulating the points where digital assets intersect with the formal financial system. The intergovernmental Financial Action Task Force (FATF) now requires all countries to regulate Virtual Asset Service Providers (VASPs), including exchanges, peer-to-peer platforms, and wallet services, through strict KYC requirements, transaction reporting and cross-border information sharing.
Regions like the EU, the UK, and the UAE already enforce these rules. The EU's MiCA framework mandates full transparency from exchanges, while the UK requires platforms to freeze suspicious transfers. Even countries in the Gulf - Dubai, Abu Dhabi, and Bahrain - now require crypto businesses to register, maintain capital reserves and follow AML protocols. Meanwhile, rather than moving toward legalisation or prohibition, India has adopted a tax-first approach by imposing 30 per cent tax on gains and a transaction-level tax deduction.
The scale of the crypto use by Bangladeshis already indicates that it is no longer a fringe phenomenon. Ignoring it will not make it disappear. What is needed is acknowledgment, regulation and oversight that address genuine risks without denying economic reality.
To harness the potential of cryptocurrencies while mitigating their risks, Bangladesh could take several steps. First, it should develop a clear regulatory framework that defines legal usage, taxation, and compliance requirements. Public awareness campaigns are also essential to educate citizens about both the benefits and risks of cryptocurrency investments. At the same time, investment in digital infrastructure would help ensure secure and efficient crypto-related transactions. Regulations should prioritise consumer protection, anti-money laundering (AML)/know your customer (KYC) compliance, and innovation. Policymakers, central banks, fintech companies, academia, and civil society can collaborate to shape a strong legal framework for cryptocurrency adoption and prevention of its misuse.
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