Crypto Trading Risks in Bangladesh: Understanding Legal and Financial Dangers

Trading cryptocurrency in Bangladesh isn’t just risky-it’s illegal. The government banned all crypto activity in 2017, yet thousands continue to trade daily. This creates severe legal, financial, and operational dangers for citizens. cryptocurrency trading risks in Bangladesh include jail time, frozen bank accounts, and total loss of funds with no legal recourse.

Legal dangers

Bangladesh Bank declared cryptocurrency illegal in 2017. As the central bank of Bangladesh, it issued a comprehensive ban citing money laundering and financial instability risks. The order prohibits all cryptocurrency transactions, including trading and possession. Despite this, platforms like Binance and KuCoin remain accessible on app stores in Bangladesh. However, using these platforms still violates the law. The government has prosecuted individuals under anti-money laundering regulations, especially after the MTFE Ponzi scheme scandal. This case defrauded thousands of investors and led to stricter enforcement.

Financial risks

Crypto traders in Bangladesh face two main financial dangers. First, using international credit cards for purchases leaves a clear paper trail. Banks track these transactions and can freeze accounts or report users to authorities. Second, many rely on local agents who buy and sell crypto for cash. These agents operate without oversight, charging high fees and manipulating prices. In 2024, a trader in Chittagong lost $8,000 when an agent vanished after receiving his payment. With no legal recourse, victims have no way to recover funds.

Operational challenges

The 2025 regulatory framework made things worse. New biometric verification rules turned onboarding into three-day ordeals. Local exchanges lost 30% of users overnight as they fled to Telegram groups. These groups now host unregulated P2P trades, where scams are rampant. A Dhaka-based trader reported losing $3,500 in a single day after falling for a fake USDT trade. Without identity checks or dispute systems, fraud is nearly impossible to challenge.

Taxation paradox

Even though crypto trading is illegal, the National Board of Revenue applies the 1984 Income Tax Ordinance to crypto gains. This means traders must report profits on illegal activities. Failing to do so risks tax penalties. Yet reporting crypto income could also trigger criminal charges for violating the ban. This creates a lose-lose situation where citizens face double jeopardy-criminal prosecution and tax audits for the same activity.

Regional comparison

Neighboring countries handle crypto differently. India taxes crypto earnings at 30% and deducts 1% tax at source. Pakistan has created Bitcoin reserves and allows regulated exchanges. Bangladesh’s blanket ban forces citizens into riskier underground markets. Without legal alternatives, traders have no safe way to participate. This regulatory gap makes Bangladeshi citizens more vulnerable than those in countries with evolving crypto frameworks.

Technical security risks

Using unregulated platforms increases cybersecurity threats. Traders often share private keys or use insecure wallets to avoid detection. In 2025, a phishing attack targeted Bangladeshi crypto users, stealing $1.2 million in USDT. Without regulated exchanges offering fraud protection, victims have no way to reverse transactions. Additionally, underground mining operations in Chittagong warehouses face frequent power outages and equipment seizures, leading to total asset loss.

Socioeconomic impact

Crypto activity can destroy financial futures. Banks are prohibited from serving crypto users, so discovered traders lose access to mortgages, loans, and basic banking. A Dhaka entrepreneur lost his business loan after his bank flagged crypto-related transactions. Meanwhile, $2.3 billion in Bangladeshi Taka flowed to offshore platforms in 2025, weakening the local currency. This capital flight harms the entire economy, not just individual traders.