Bangladesh’s Foreign Exchange Act and Cryptocurrency Restrictions Explained

Bangladesh has made headlines for its tough stance on digital money, but the legal maze behind the ban is often misunderstood. The government leans on a law from 1947, couples it with central‑bank directives, and ends up with a set of rules that are both strict and, in many ways, ambiguous. If you’re wondering how the Foreign Exchange Act Bangladesh actually affects crypto users, what the tax angle looks like, and whether the ban can hold up in court, this guide breaks it all down in plain language.

Key Takeaways

• The 1947 Foreign Exchange Regulations Act (FERA) defines “currency” in a way that does not clearly cover cryptocurrencies.
• Bangladesh Bank has issued a blanket prohibition on buying, selling, or holding crypto since 2017, citing money‑laundering and stability concerns.
• Taxes on crypto gains are applied under the general Income Tax Ordinance, treating crypto as property, even though the activity is officially banned.
• Enforcement relies on monitoring bank transfers and informal agent networks, but a thriving underground market still exists.
• Regional peers (Pakistan, India) are moving toward regulated frameworks, putting Bangladesh’s prohibition in stark contrast.

Legal Foundations: The Foreign Exchange Regulations Act 1947

Foreign Exchange Regulations Act 1947 is the cornerstone statute that governs foreign exchange and currency transactions in Bangladesh. Section 2(b) splits “currency” into two buckets: a detailed list of traditional instruments (cheques, letters of credit, etc.) and any other instrument that the Bangladesh Bank may declare as currency via a Gazette notice. Crucially, the central bank has never issued such a notice for digital tokens, leaving a legal gray area.

The Anti‑Money Laundering Act (AMLA) mirrors FERA’s definition when it talks about foreign currency, which means the same definitional gap spills over into anti‑laundering enforcement.

Bangladesh Bank’s Prohibition

In 2017, the Bangladesh Bank issued a circular that bans "all cryptocurrency usage, trade and possession". The rationale centers on three risks: money laundering, terrorism financing, and destabilising the monetary system. The ban applies to any transaction that passes through the formal banking channel - whether it’s a direct purchase on an exchange or a peer‑to‑peer transfer that eventually touches a bank account.

Because the law was framed for fiat currencies, the bank’s language stretches the definition of “currency” to include crypto, even though the statutory language does not explicitly do so. This stretch has sparked debate among legal scholars about whether the prohibition can be enforced criminally without a proper amendment to FERA.

Tax Treatment by the National Board of Revenue

While the ban is in place, the National Board of Revenue (NBR) treats crypto assets as property for tax purposes. Under the Income Tax Ordinance of 1984, any profit arising from the sale or exchange of crypto is subject to capital‑gains tax. In practice, this creates a paradox: you’re liable for tax on gains from an activity the government says you cannot legally perform.

As of 2025, there is no dedicated crypto‑tax schedule, so taxpayers must fit their crypto income into existing categories - typically as “capital gains” or “business income”, depending on the scale of activity. The NBR has hinted at drafting specific guidelines, but no concrete timeline has been announced.

Enforcement Realities: The Underground Market

Despite the formal ban, a vibrant informal ecosystem has sprouted. Global exchanges like Binance and KuCoin remain downloadable from the Google Play Store, allowing Bangladeshi users to create accounts with a foreign phone number. The two main enforcement levers are:

1. Monitoring bank‑level USD transactions - any debit or credit card payment that shows a dollar amount can be flagged.
2. Tracking local agents - individuals who accept Bangladeshi Taka in cash and, for a small fee, hand over crypto wallets or provide QR codes for purchases.

These agents operate in a gray zone, often claiming they are merely facilitating “foreign remittance” services. Because the activity bypasses formal banking channels, gathering solid evidence for prosecution is difficult, and most cases end in warnings rather than convictions.

Regional Comparison: How Neighbours Handle Crypto

The table shows that Bangladesh stands apart by maintaining a blanket ban, while its neighbours are either regulating or simply taxing crypto activity. This isolation could limit the country’s ability to tap into the growing digital‑asset economy.

Expert Opinions and Future Outlook

Academics and industry insiders are split on the best path forward. Dr. B M Mainul Hossain of Dhaka University argues that outright bans “are not an effective solution” and recommends a regulatory sandbox that lets innovators experiment under supervision. His view reflects a broader sentiment that a modern, technology‑friendly framework could capture tax revenue and reduce illicit use.

On the other hand, officials at Bangladesh Bank remain cautious, pointing to the lack of a clear statutory definition of crypto as “currency”. Without an amendment to FERA or a new dedicated law, the central bank’s ability to enforce the ban may be legally shaky.

Possible scenarios for the next two years include:

• Legislative clarification: Parliament could amend FERA to explicitly label digital tokens as a prohibited foreign exchange instrument.
• Regulatory overhaul: The government might create a dedicated crypto authority, similar to Pakistan’s PDAA, to issue licenses and set compliance standards.
• Continued prohibition with tighter enforcement: New surveillance tools could be deployed to better trace crypto flows through informal agents.

Whichever route is taken, the current legal ambiguities mean that businesses and individual investors should proceed with caution, staying informed about both the ban and the tax obligations.