Cryptocurrency and Money Laundering in Iraq: A Delicate Balance Between Opportunity and Risk
The Rise of Cryptocurrency in Iraq
In a country where financial transactions are often shrouded in secrecy and corruption is rampant, the rise of cryptocurrency has brought both opportunity and risk. With a high unbanked population and limited access to traditional banking services, cryptocurrencies have provided a lifeline for many who were previously excluded from the financial system.
The Challenges of Navigating the Complex Landscape
Abdurrahman Bapir, founder of Kurdcoin, the first and largest crypto brokerage in Iraq, has witnessed firsthand the challenges of navigating this complex landscape. “Iraq’s unbanked population is one of the highest in the world,” he said in an interview with CoinDesk. “Cryptocurrency has provided a lifeline for many who were previously excluded from the financial system.”
The Obstacles Facing Crypto Users and Businesses
However, the widespread adoption of crypto in Iraq has come up against a host of obstacles facing both crypto users and businesses. The Iraqi Central Bank’s sustained hostile attitude towards cryptocurrencies has forced people to seek crypto investment opportunities in a black market with no accountability or regulatory oversight.
- Thousands of people have fallen victim to crypto scams, Ponzi schemes, and other forms of fraud
- Tens if not hundreds of millions of dollars of people’s money have been stolen by foreign agents or companies posing as legitimate businesses who require payment in crypto
A Vicious Cycle of Regulation and Fraud
A vicious cycle is created in which the government bans crypto because it’s used in fraud, and fraudsters manage to continue to use it because it’s not regulated. The only way to break this cycle is by introducing a bill to regulate digital currencies and requiring all crypto businesses to be registered.
Lack of Knowledge and Education
The lack of knowledge about cryptocurrencies and blockchain technology within both the government and wider society has also hindered progress. A report by Deloitte highlighted that concern, stating that “instead of pushing the cryptocurrencies to the periphery of financial systems, the central banks and other regulators as well as market authorities must play a leading role in making them mainstream.”
Mitigating Challenges through Education and Advocacy
Bapir’s team at Kurdcoin has tried to mitigate some of these challenges by pushing for regulation through major law firms and increasing knowledge about cryptocurrencies. However, major exchanges like Binance, Crypto.com, and Coinbase do not provide services in Iraq.
Increasing Adoption and the Need for Regulation
Despite these roadblocks, cryptocurrency use in the country has been constantly increasing. With a young population of over 40 million, many have turned to crypto as an alternative for investment and as a store of value.
“It’s better and safer in several ways than storing cash up at home,” Bapir said. “Many seem to have turned to crypto because it’s easier to use and more secure.”
As mass crypto adoption in Iraq seems inevitable due to financial opportunities, ease of using crypto for payments, and other applications, the government must take a proactive approach to regulation.
“The authorities need to understand that cryptocurrencies are not just a means for money laundering and fraud, but also an opportunity for financial inclusion and economic growth,” Bapir concluded.