ZoneBitcoin EditorialOn Monday, March 20, it was exactly 20 years since Iraq suffered the first American strikes, marking the start of a war that lasted 8 years. Without the approval of the UN Security Council, the United States of America, under the command of George W. Bush, put an end to the bassist regime of Saddam Hussein, who will be hanged on December 13, 2011, ending the war.
When American troops withdrew, the country found itself face to face with itself, destitute and demolished with a bruised population and sovereignty on life support. The war notably contributed to the rise of the Daesh movement which continued to destabilize the region before spreading to the rest of the world...
So, twenty years later, tongues are finally loosened and thetime for an objective assessment is required. Iraq today still suffers from the after-effects ofa war that is still difficult to justify today, and the economic situation remains complex for the entire population.
In this particular context, it appears that an ever-increasing number of people are interested in bitcoin and cryptocurrencies. In a country that must rebuild everything with a shaky financial system, cryptocurrencies are a first choice alternative for making international payments. However, the use of cryptocurrencies was banned in the country in 2017. Presumably, this does not prevent the population from circumventing the law to obtain bitcoin and other cryptocurrencies.
Despite the ban on the use of cryptocurrencies, its adoption is still greater
The government banned the use of cryptocurrencies in Iraq in 2017, like other countries such as China, Algeria, Turkey and Nigeria. Although since then, certain regulations have been relaxed, and countries are increasingly showing themselves crypto-friendly from a legal point of view, the Iraqi government has not reversed its ban. However, Iraqis like other populations in the Middle East such as the Lebanese or Turkish population are showing a growing interest in cryptocurrencies. Although states can theoretically prohibit the use of cryptocurrencies, it turns out to be very difficult if not impossible to prohibit it in practice. This explains why the adoption of cryptocurrencies is still higher in the region.
The ban on the use of digital currencies may have contributed - paradoxically - to the emergence of scam businesses of all kinds. When cryptocurrencies are banned, the lack of a regulatory framework provides scope of entry for multiple scams. The equivalent of millions of dollars was then stolen by companies posing as legitimate businesses and using cryptoassets to lure victims. This was, for example, the case of the company Praetorian Group International, founded on a Ponzi pyramid whose founders disappeared with more than 40 million dollars.
In a country plagued by economic difficulties, where investments often constitute life savings, these scams have dramatic consequences within the families of the victims.
In a financial cemetery, exchange platforms flourish
Iraq's population is around 40 million with more than 60% of the population under 25 years old. Internet and mobile usage penetration is above 75%. This makes it an ideal candidate for adopting cryptocurrency, especially as the digital payments and'open banking are still underdeveloped.
For many entrepreneurs such as Nimrod Lehavi, it is precisely in this context that the adoption of bitcoin and cryptocurrencies is likely to be strongest. Bitcoin appears to be a first choice alternative in countries that do not have a robust financial system.
There are then numerous peer-to-peer exchange groups on social networks such as Telegram and Facebook, just as certain anonymous stockbrokers are present on decentralized messaging.
The country's first exchange platform, Kurdcoin, was launched in 2017 by Abdurrahman Bapir. Based in Erbil, the capital of Iraqi Kurdistan, the platform circumvents the Iraqi ban because it is under the jurisdiction of an autonomous state, which has not (yet?) legislated on the use of cryptocurrencies. The platform has thousands of customers who regularly use the platform on which they can, with Iraqi dinar (IQD), buy and sell bitcoin, mainly.
Abdurrahman Bapir said the vast majority of these customers were businessmen and people interested in the world of technology in general. He added that many people living outside Iraq used Kurdcoin in order to send remittances to their families. This is a way to bypass providers such as Western Union who do not accept cryptocurrencies and who charge significant commission fees. Cryptocurrencies including bitcoin are then used as currency payment to pay for certain services.
Some Iraqis are also attracted to bitcoin as a speculative asset because "there are no opportunities to invest through banks," Abdurrahman Bapir said, and it allows them to access financial products that would otherwise be inaccessible.
How do Iraqis manage to circumvent the ban on using cryptocurrencies?
Buying and selling bitcoin in Iraq, given the ban, is not easy. What makes things even more complicated is that the vast majority of Iraqis do not have a bank account.
So, to be able to buy or sell bitcoin against international fiat currencies like dollars, they can use exchange platforms, which are based in flexible jurisdictions, such as the OKX platform, based in Seychelles. The platform is then open to all nationalities in the world, even those from countries that have banned the use of cryptocurrencies. It is also a platform that is also very popular with Africans who wish to buy bitcoin. Users can indeed carry out transactions with payment cards that do not involve opening a bank account as with the service ZainCashEg.
Bitcoin can be an economic springboard for the Middle East region
The Middle East is a rather heterogeneous landscape in terms of cryptocurrency regulations. While Bahrain and especially the United Arab Emirates with Dubai in the lead which still attract crypto businesses, Iraq, Lebanon and Turkey have banned the use of cryptocurrencies. let's remember that Bitcoin is considered a “Halal” asset which is therefore not prohibited within the framework of the Muslim religion. Governments ban bitcoin for political-economic reasons to combat fraud and money laundering in particular.
For the founder of KurdCoin, the use of cryptocurrencies could attract new players in the region and promote the development of a new technological branch. He said in this regard that cryptocurrencies can greatly » improve the quality of life (in Iraq) and around the world"
“I hope our government and central bank will approach crypto with an open mind and see it as a gateway to the future, not a threat.”
Abdurrahman Bapir, https://www.al-monitor.com/originals/2022/11/kurdcoin-founder-says-lack-regulation-cryptos-big-challenge-iraq#ixzz7wV1UAnck
Rather than ban it, Iraq should consider regulation
What we see with Iraq, as with many countries where the population is largely unbanked, the use of bitcoin is necessary. Bitcoin is not considered only as a speculative asset, a safe haven but indeed a currency, like another, even superior (in terms of possibilities) than the national currency.
This is why many Iraqis, as Abdurrahman Bapir points out, want the country to establish a precise regulatory framework for companies working in the cryptographic sector. This is also the statement shared by Nipun Srivastava, director of the consulting firm Deloitte in the Middle East, specifying that “instead of pushing cryptocurrencies to the periphery of financial systems, central banks and other regulators must play a leading role in making them mainstream.”
See also:
