Algerian Authorities Ban all Cryptocurrency-related Actions, Ranging from Possession to Mining Operations
In a move that goes against the global trend of increasing crypto liberalization, Algeria has introduced a new law banning all crypto-related activities, including trading, ownership, mining, issuance, and promotion [1]. This comprehensive ban extends and expands the 2018 Financial Law, which previously prohibited the holding and exchange of cryptocurrencies but did not cover mining activities [2].
Experts and international financial organizations suggest that blanket bans on cryptocurrency activity pose significant challenges for enforcement. These bans criminalize virtually all crypto activities and aim to address concerns such as money laundering, tax evasion, fraud, and national security risks [3]. However, practical enforcement difficulties arise, such as users accessing banned crypto services via VPNs and the potential for crypto activity to move underground, making monitoring and compliance harder [3].
One of the key concerns is that such bans may stifle innovation and financial technology development, potentially harming economic modernization and driving blockchain talent away [2][3]. While the bans reinforce anti-money laundering (AML) and counter-terrorism financing (CTF) objectives, critics argue they may inadvertently empower unregulated criminal networks and complicate AML/CTF goals, thus challenging effective enforcement [3].
Matthias Bauer-Langgartner, a commentator on the subject, states that broad-based restrictions on cryptocurrency tend to drive the crypto ecosystem underground, fuelling gray markets where users lack safeguards and protections [3]. He further suggests that instead of outright bans, it would be more productive to introduce regulation that grants trading platforms legitimacy in exchange for complying with standards of transparency [3].
The Financial Action Task Force (FATF) reported in a June update that broad-based bans are difficult to implement effectively [4]. This reflects a broader global debate where most countries prefer regulated integration over outright prohibition, viewing the latter as less effective and more disruptive [2].
Interestingly, China, a country known for its hardline stance on crypto, announced a shift in its policy earlier in July [5]. The enforceability of blanket bans on crypto is a topic of discussion among commentators, with Ari Redbord, a prominent voice in the field, explaining that it's incredibly difficult for any single jurisdiction to fully enforce a ban when transactions can move instantly across borders and platforms [3].
Under the new law, violations could result in prison sentences ranging from two to 12 months and fines between 200,000 and 1 million dinars ($1,500 to $7,700) [1]. However, the question remains whether this comprehensive ban will be effectively enforced, or if it will drive the Algerian crypto ecosystem underground, fueling gray markets and complicating AML/CTF efforts.
References:
[1] Algeria bans all crypto-related activities, including trading, ownership, mining, issuance, and promotion. (n.d.). Retrieved August 12, 2022, from https://cointelegraph.com/news/algeria-bans-all-crypto-related-activities-including-trading-ownership-mining-issuance-and-promotion
[2] Algeria's crypto ban goes against global trend of increasing crypto liberalization. (n.d.). Retrieved August 12, 2022, from https://cointelegraph.com/news/algeria-s-crypto-ban-goes-against-global-trend-of-increasing-crypto-liberalization
[3] Experts question Algeria's crypto ban enforceability and impact. (n.d.). Retrieved August 12, 2022, from https://cointelegraph.com/news/experts-question-algeria-s-crypto-ban-enforceability-and-impact
[4] FATF report: Broad-based bans on crypto are difficult to implement effectively. (n.d.). Retrieved August 12, 2022, from https://cointelegraph.com/news/fatf-report-broad-based-bans-on-crypto-are-difficult-to-implement-effectively
[5] China announces shift in hardline crypto policy. (n.d.). Retrieved August 12, 2022, from https://cointelegraph.com/news/china-announces-shift-in-hardline-crypto-policy
- The Algerian government has banned all activities related to cryptocurrencies, encompassing trading, ownership, mining, issuance, and promotion, according to a new law [1].
- This comprehensive ban expands the 2018 Financial Law, which initially prohibited the holding and exchange of cryptocurrencies but did not cover mining activities [2].
- Experts and financial organizations suggest that outright bans on cryptocurrency activities pose significant challenges for enforcement, as they criminalize virtually all crypto activities and aim to address concerns such as money laundering, tax evasion, fraud, and national security risks [3].
- One of the key concerns is that such bans may stifle innovation and financial technology development, potentially harming economic modernization and driving blockchain talent away [2][3].
- The Financial Action Task Force (FATF) reported in a June update that broad-based bans are difficult to implement effectively [4].
- China, known for its hardline stance on cryptocurrency, recently announced a shift in its policy, indicating that the enforceability of blanket bans on crypto is a topic of discussion among commentators [5].
- The new law in Algeria imposes prison sentences ranging from two to 12 months and fines between 200,000 and 1 million dinars ($1,500 to $7,700) for violations [1].
- The question remains whether this comprehensive ban will be effectively enforced, or if it will drive the Algerian crypto ecosystem underground, fueling gray markets and complicating anti-money laundering and counter-terrorism financing efforts, as suggested by experts [3].
