Bitcoin could mark the new face of Syria

Syria is a country marked since 2011 by armed conflicts and alarming economic instability. However, December 8, 2024 represents a real political turning point for the country with the overthrow of the Bashar El-Assad regime. The surrender of his government then gave way to a new political government that had to deal with galloping inflation and a financial system in absolute decay. The country "lost a decade in terms of human development index and its economy returned to its level of the 80s" according to the United Nations.

Faced with such economic devastation, the new Syrian authorities are exploring a bold and innovative path: adopting Bitcoin as a pillar of its economic reconstruction, following the example of Salvador, the first country to legalize bitcoin in 2021. Thus, by equipping itself of a new flag and a new currency, the country seems to see in Bitcoin the hope of a better future.

This initiative, as ambitious as it is unexpected, could well redefine the country's financial future and serve as a model for other nations facing similar challenges such as wars.

What would be the challenges and geopolitical implications of such a decision on the national and global economy? For the Syrian government, bitcoin and cryptocurrencies could well pick up the pieces of a drifting economy.

Why is Syria considering legalizing cryptocurrencies in the country?

In this complex context where Syria must reinvent itself after 14 years of war, the adoption of Bitcoin appears to some as a providential solution, and this for several reasons.

On the one hand, the legalization of cryptocurrencies would help combat the country's galloping inflation (over 120% in 2023). The Syrian pound is experiencing a massive depreciation, which leads to a loss of purchasing power for civilian populations. In the same way that Donald Trump envisages with a strategic bitcoin reserve, Syria also believes it can benefit from a national bitcoin reserve.

The other point raised is the possibility of circumventing the international sanctions that are in force in the country. For example, we know that Russia was a pioneer in accepting international payments in cryptocurrencies, following the war in Ukraine. On a smaller scale, thanks to bitcoin, Syrians in the diaspora could more easily send money to their relatives back home, thus stimulating the local economy.

Finally, the other advantage of legalizing bitcoin is that it would represent a new way to modernize the country's financial system. Moreover, it would attract new investments, particularly those related to blockchain and emerging technologies. It would also attract new entrepreneurs, for example, as we have seen, with the VISA granted for crypto holders in El Salvador.

All of these combined benefits could contribute to the country's economic recovery, while positioning Syria as a pioneer in the adoption of bitcoin, globally.

The action plan proposed by the "Syrian Center for Economic Research" 

The Syrian Center for Economic Research has developed a detailed proposal to integrate Bitcoin into the national economy. The proposal also demonstrates a real, rational desire to adopt Bitcoin in the country.

In addition, a clear legal framework was proposed to legalize the exchange, sale and mining of Bitcoin and other cryptocurrencies. Financial services from banks and start-ups would be sought to integrate Bitcoin into the country's new economy.

As for the national currency, the research center has proposed a digital version of the Syrian pound. The biggest upheaval in the project is that the pound would be triple-backed by reserves in dollars, bitcoin and gold.

What would be the geopolitical implications of such a decision in Syria?

Syria’s adoption of Bitcoin would have significant geopolitical implications as the move could further strain relations with Western countries, while potentially bringing Syria closer to other crypto-friendly nations. Interestingly, with Bashar Assad’s regime under US sanctions, the country could be closer to the US especially if the currency is also pegged to the US dollar.

If this initiative succeeds, Syria could become a model for other countries in the region facing similar economic challenges. This is particularly the case for theIran exploring use of cryptocurrencies for international trade, to face US sanctions.

Syria's adoption of bitcoin could also boost the Middle East as a whole and serve as a model. Countries like Turkey for example, would potentially be interested in a similar initiative. The country is, in fact, experiencing a growing adoption of cryptocurrencies by its population, in response to inflation and economic instability.

What should Syria expect?

The technical implementation of this ambitious project poses several challenges and it will not be "easy" to face them, despite the good intentions. First of all, the country is emerging from a very heavy war, which prevented the proper development of the country's infrastructure. This will have to be remedied initially to facilitate the integration of cryptocurrencies.

From a security perspective, robust security systems will also need to be put in place to protect the digital assets of the state and citizens. This will not be without challenges, once again. Training will need to be adapted for both the administration and the population.

An optimistic vision for Syria

Syria’s move to embrace Bitcoin as a pillar of its economic reconstruction represents a bold and potentially salutary move for the country as a whole. It illustrates the search for innovative solutions to complex economic challenges, while raising important questions about the future of national and international monetary systems.

Although it faces many obstacles, both technical and geopolitical, this initiative could, if successful, pave the way for a new era in the use of bitcoin at the state level.

This is a country that has been hampered by war for more than 14 years and must face new paradigms. Let us recall that the country has just ended more than 5 decades of a regime marked by political repression.

Bitcoin could then be the very symbol of a revival of Syria, with a strong currency that cannot be “controlled” by a State. For a population that has suffered so much from the tyranny of successive authoritarian governments, this could have a very particular resonance…

Hopefully the Syrians can hear it that way.