Following central bank decision, Bitcoin Foundation Bangladesh halts activities

Earlier this week, Bangladesh’s central bank issued a new warning strongly suggesting that bitcoin use was now a criminal offense in the country. Bank officials later told news agency Agence France-Presse (AFP) that anyone found guilty of using or selling bitcoin in the country could be sentenced to up to 12 years in jail. Bangladesh already has very steep penalties in place for money laundering, and the ruling — while decidedly harsh and draconian — didn’t seem out of character. According to Bitcoin Foundation Executive Director Jon Matonis, however, the situation is less clear-cut than a simple ban.

“This week, the Bangladesh Central Bank issued a standard cautionary statement that spooked the Bitcoin community, particularly in Bangladesh, and those with loved ones in the country,” Matonis wrote on the Bitcoin Foundation blog today. “Now, we all know how this goes — one Bitcoin story with a misleading headline is released and its message ripples across the news wire. As a result, Bitcoin’s promising social and economic benefits for the people of Bangladesh have been put on pause for the time being.”

Matonis said that while the Bitcoin Foundation’s Bangladesh affiliate has suspected operations, there’s good reason to think that bitcoin is still perfectly legal in the country for normal uses. “Since the release of the statement, our global team has been working in tandem with our local team to obtain more information and, to date, have determined that the statement is a standard issue of caution and not an outright ban. Meaning, the Bangladesh Central Bank is alerting consumers of the risks involved with using Bitcoin and reminding them that Bitcoin is not government issued or sanctioned.”

According to Matonis, the “ban” was simply a poorly worded warning for those who would seek to use bitcoin to break the law. If bitcoin is used to flout the country’s Foreign Currency Control Act or Money Laundering Control Act, users will be punished exactly the same way they would if cash were used. In other words, using bitcoin doesn’t exempt criminals from Bangladeshi law.

If true, this is very good news for bitcoin entrepreneurs in Bangladesh. With nearly $14.5 billion in remittances flowing into the country each yer, and over 96% mobile phone adoption, it’s an ideal market for bitcoin adoption. Until there is official clarification from the country’s authorities on bitcoin’s legal status, however, investment and adoption in the county are expected to remain low.