Digital currency trading not allowed at all

The Bangladesh Bank (BB) has once again asked all to refrain from trading all kinds of virtual currency or cryptocurrency in the country in a bid to curb the digital hundi.

The banking regulator made the call as the definition of “currency” given by the Foreign Exchange Regulation Act, 1947 does not recognise virtual currencies.

An official of the concerned department of the central bank said the steps have been taken to stop digital hundi.

“Virtual currencies or virtual assets have no financial claim embedded and neither issued by any sovereign nor guaranteed by any jurisdiction. Thus, their value is highly volatile and associated with high financial risks,” reads the notice issued on Thursday.

Virtual currencies [subset of virtual assets] are not approved by the central bank to settle any type of foreign exchange transaction or make those for investment as per the act, according to a BB notice.

The central bank in the notice said borderless transactions of unregulated virtual currencies are growing fast and being exchanged with some other foreign currencies.

Nonetheless, borderless transactions of unregulated virtual currencies are growing fast and being exchanged with some other foreign currencies, thus treated as an alternative form of foreign exchange transactions which is a contravention of the FER Act, 1947, it said.

Cryptocurrencies initially did not take approval from any country, but central banks of some nations such as Japan, Singapore, the United Arab Emirates and the United States have officially recognised them in recent times.

Virtual assets defined

The Financial Action Task Force (FATF) has defined virtual assets as a digital representation of value that can be digitally traded, or transferred, and can be used for payment or investment purposes. Point to be noted that, virtual assets do not include digital representations of fiat currencies, securities and other financial assets, recognized by Bangladesh Bank, according to the notice.

“Retention of export proceeds abroad in any form without limiting to equity/portfolio investment, purchase of physical assets/virtual assets, maintenance of accounts regardless of currencies including crypto currencies constitutes contravention of the FER Act, 1947 and is subject to cognizance under Section 23(1) of the said act as mentioned in FE Circular No. 39 of November 18, 2021. Any transactions made in/from/to Bangladesh for obtaining virtual assets (as defined in paragraph 3) or its subset- virtual currencies, are not permitted by Bangladesh Bank,” it reads.

As well as providing any kind of facilitation in favor of doing business, activities, and operations associated with exchange/transfer/trading of virtual assets or virtual currencies, are not permitted by Bangladesh Bank, it said.

“Any violation of the aforementioned instructions constitutes contravention of Section 5(1)(e) of the FER Act, 1947 and is subject to cognizance under Section 23(1) of the said Act as per SRO No. 59-LAW/2021 dated March 08, 2021 . Therefore, all individuals/entities/institutions operating in Bangladesh shall refrain from dealing in virtual assets, virtual currencies and providing any kind of facilitation in favor of doing business, activities, and operations associated with exchange/transfer/trading of virtual assets or virtual currencies.