How Crypto thrives in Bangladesh’s legal grey zone

On a random day in 2018, Shafin, then a university student, found himself staring at a screen in disbelief. A few crypto coins he had left idly in a digital wallet had jumped in value. "I made Tk50,000 just like that," he recalled.

That same year, the Bangladeshi government issued stern warnings against using Bitcoin or any cryptocurrency. But for Shafin and many like him, the digital gold rush had already begun.

Arman's story is similar. Last year, he spent just Tk13,000 on cryptocurrencies and ended up earning nearly six times that amount. "I did not even have to do much, just a few simple tasks here and there — like sharing a post, following a page, etc," he said.

These personal stories reveal Bitcoin's strange status in Bangladesh—banned in practice, yet wildly popular.

According to the Chainalysis Global Crypto Adoption Index, Bangladesh ranks 35th in the world in terms of cryptocurrency users, despite not being legally recognised.

Trading behind the curtain

Despite official warnings, cryptocurrency trading continues through digital platforms, primarily using exchanges like Binance.

Binance, a centralised exchange (CEX), holds user data and could, in theory, share it with governments if required. But decentralised exchanges (DEX) offer more anonymity and are harder to trace.

Shafin explained how crypto trading works in Bangladesh. As he explains, at first users just need to sign up on a trusted exchange like Binance or Coinbase, which are neither banned nor legally acknowledged in Bangladesh.

Then these platforms require you to verify yourself with your ID, and then add funds. Adding funds to these platforms is as easy as it can be — you can do it with your mobile banking accounts like bKash or Nagad. Then buy a coin like Bitcoin, Ethereum, or any other coin you find stable, then trade by buying low and selling high.

He shared another interesting fact about a specific group of traders. "Many mobile banking service agents are involved in trading. They do crypto trading alongside other transactions. When they sell coins, they receive payments via 'cash out,' which earns them some extra money on top of the crypto profit."

"And when they buy coins, they pay the money to the seller via the 'cash in' feature, which again, provides them some extra cash. It is like hitting two birds with one stone. But I see no fault in that, unless they are laundering money somewhere else."

"A growing number of people in Bangladesh also participate in 'Airdrops" — a platform where users receive free coins for completing small online tasks. This method allows people to collect cryptocurrencies without spending any money," said Arman. It is popular among students and youth looking for an extra stream of passive income with little to no investment.

Legal limbo

Bitcoin's global value has soared, especially after major endorsements from corporations like Tesla. As of now, one Bitcoin is worth over one crore taka. But in Bangladesh, the law remains unclear.

The Bangladesh Bank declared in 2017 that cryptocurrencies like Bitcoin are not legal tender. There is no specific law banning their use, but existing legislation on foreign exchange and money laundering makes trading in crypto a risky affair.

A few years back, Bangladesh Bank told the Criminal Investigation Department (CID) that owning or transacting in crypto is not, by itself, a punishable offence. However, if these activities are linked to money laundering, terrorist financing, or foreign currency violations, they can be prosecuted.

The result is a confusing mix: it is not quite a crime, but it is far from being legal. Meanwhile, thousands of people like Shafin and Arman continue to engage in cryptocurrency trading.

Scams, arrests and more

Not all stories end in profit. "Sometimes the market is manipulated, and the price of the coin is artificially inflated," Arman said. "People rush in to buy, and then it crashes."

He has also seen people fall for scams, starting with small crypto tasks that pay a little at first to gain trust. Later, they ask for investments, and then, when a beginner invests, the scammer vanishes.

Shafin pointed out another issue, the use of crypto to move money out of the country. He described a case where an individual sent a large amount of money to a Dubai wallet and left Bangladesh for Saudi Arabia under the guise of performing Hajj. He never came back. "By the time a case was filed here in Bangladesh, he had already settled in Dubai," Shafin said.

In recent years, law enforcement authorities have made headlines by arresting individuals linked to illegal cryptocurrency activity. In 2021, a man named Rayhan was arrested in Gazipur, accused of running a Bitcoin fraud group. He allegedly processed over $35,000 in transactions in just one month and maintained ties with hackers from Nigeria, Russia, and Pakistan.

Another arrest followed in Dhaka. Ismail, a former toy businessman, was charged with using a fake company to carry out crypto scams worth over $1.5 million. After his arrest, questions flooded social media about how authorities accessed private transaction data. The RAB clarified that transaction details were obtained from Ismail's stored digital wallets.

Amid growing public interest and mounting confusion, experts are calling for regulation rather than denial.

A missed opportunity?

The Information and Communication Technology Division once showed interest in blockchain technology. The 2020 "National Blockchain Strategy" recognised that global investment in blockchain startups had reached $23 billion. The strategy argued that Bangladesh was missing out by not engaging with this new technology.

At the same time, it warned against diving in without proper systems in place. The strategy emphasised the need for legal clarity and technical capacity.

Understanding how Bitcoin works is key to understanding the debate. It uses blockchain technology, which records transactions in blocks linked together in sequence. These transactions are peer-to-peer, without the need for banks. They are stored in digital wallets and accessed via long ID codes, not names.

This offers freedom and flexibility but also raises concerns. Transactions are hard to reverse, and stolen coins are nearly impossible to retrieve. And when linked to scams or crime, as seen in recent arrests, it becomes difficult for law enforcement to act swiftly.

Even platforms like Telegram, mainly known as a messaging app, now play a role in crypto. Arman noted that some Telegram bots and groups offer "tap-to-earn" games, investment tips, and trading tools. However, scams also flourish there, as people often mistake these services for official ones.

Looking forward

As cryptocurrency gains traction worldwide, Bangladesh finds itself at a crossroads. One path is to ignore it and continue the crackdowns. The other is to engage with it through open discussion, regulation, and education.

Dr B M Mainul Hossain, a professor at Dhaka University and director of its Institute of Information Technology, believes that banning is not a solution. "Sitting back and doing nothing is not the answer," he said. "Cryptocurrency is already used in many countries legally. We should also think about how to monitor and regulate it."

Professor Mainul suggests that a path towards transparency is possible. "It is possible to use cryptocurrency without hiding your identity," he said. "That is the direction we need to move in."

He urged the government to adopt a balanced approach, considering both the risks and benefits. "There are both advantages and risks, and discussions are already taking place, but it needs to be faster."

Disclaimer: Some names mentioned in this story have been changed to protect their identities.