Foreign Exchange Act and Crypto Restrictions in Bangladesh: What You Need to Know in 2025

It’s 2025, and if you’re in Bangladesh, owning or trading Bitcoin isn’t just risky-it’s officially banned. But here’s the twist: the law saying it’s illegal might not actually cover cryptocurrency at all. The government points to the Foreign Exchange Regulations Act of 1947 as the reason crypto is forbidden. Yet, that law was written before computers even had memory chips. And it doesn’t mention digital coins once.

What the Foreign Exchange Act Actually Says

The Foreign Exchange Regulations Act (FERA) of 1947 was made to control money flowing in and out of Bangladesh after independence. It defines what counts as "currency" in two very specific ways. First, it lists physical and paper instruments: banknotes, cheques, drafts, money orders, letters of credit. Second, it says the central bank can declare anything else as currency-if it publishes a formal notice in the official Gazette.

Here’s the problem: Bitcoin, Ethereum, or any other crypto doesn’t fit the first list. And Bangladesh Bank has never issued that second notice. Not once. Not even in 2017, when they announced the ban. That means, legally speaking, crypto isn’t "currency" under FERA. So how can you break a law that doesn’t say crypto is illegal in the first place?

Legal experts in Dhaka have pointed this out for years. Dr. B M Mainul Hossain, a finance professor at Dhaka University, says the ban is more about fear than law. "You can’t criminalize something that the law doesn’t define," he told a local financial journal in 2024. "This isn’t enforcement-it’s a warning with teeth."

How the Ban Actually Works

Even if the law is shaky, the ban is real in practice. Bangladesh Bank told all banks and financial institutions in 2017: no crypto trading, no holding, no facilitating. That means if you try to buy Bitcoin using your local bank account, the transaction will be blocked. Credit and debit cards linked to Bangladeshi banks can’t be used on Binance, KuCoin, or any other exchange. If you try, your card might get frozen.

But people still do it. How? Through underground agents. You find someone in your neighborhood who’ll take your Bangladeshi Taka in cash and send you Bitcoin through a peer-to-peer app. They make a small commission-maybe 2% to 5%. These agents don’t use bank accounts. They use mobile wallets, cash deposits, even hundi-style networks that have existed for decades. The government knows this is happening. They track dollar-denominated card transactions and monitor suspicious money flows. But chasing thousands of small cash deals? That’s nearly impossible.

The Tax Paradox

Here’s where it gets even stranger. The National Board of Revenue (NBR) says crypto profits are taxable. Under the Income Tax Ordinance of 1984, if you sell Bitcoin for a profit, you owe capital gains tax. But here’s the catch: the thing you’re profiting from is illegal to own. So you’re being asked to report income from an activity the law says you shouldn’t be doing at all.

No one has been prosecuted for not paying crypto taxes-because there’s no system to track it. The NBR doesn’t require exchanges to report transactions. There’s no crypto-specific tax form. You’re supposed to declare it on your regular income return, but most people don’t. Why? Because if you admit you made money from crypto, you’re also admitting you broke the law.

This contradiction isn’t unique. It’s like being told you can’t drive a car, but if you do and get into an accident, you still have to pay for the damage. The system is broken by design.

How People Still Use Crypto

Despite the ban, crypto apps are still on the Google Play Store in Bangladesh. Binance, KuCoin, Bybit-download them, install them, and you’re ready to trade. No ID verification needed. No bank link required. You can buy crypto with a prepaid card, a friend’s account, or even through a local agent who deposits cash on your behalf.

Many young professionals and freelancers use crypto to get paid for overseas work. If you’re a designer on Upwork or a writer on Fiverr, getting paid in USD via PayPal is slow and expensive. Crypto is faster and cheaper. Some even use stablecoins like USDT to protect their earnings from the taka’s steady depreciation.

The underground market is growing. While there are no official numbers, regional estimates suggest Bangladesh’s crypto volume could be in the hundreds of millions of dollars annually. Pakistan, which just launched a national crypto authority in May 2025, has an estimated $25 billion informal crypto market. Bangladesh’s population is larger. Its youth are tech-savvy. And its banking system is slow. That’s a recipe for crypto adoption-no matter what the law says.

How Other Countries Are Doing It

Bangladesh isn’t alone in banning crypto-but it’s one of the few still holding on to that stance in 2025. India, with a similar population and economy, took a different path. They taxed crypto at 30% and added a 1% tax on every transaction. In 2024-2025, they collected $1.8 billion in crypto taxes. Instead of fighting adoption, they taxed it.

Pakistan went even further. In May 2025, they created the Pakistan Digital Assets Authority (PDAA), a government body to license exchanges, regulate wallets, and even allocate 2,000 megawatts of electricity for Bitcoin mining. That’s not a ban-it’s an infrastructure plan.

Bangladesh’s approach is isolationist. It’s like trying to stop the internet by banning Wi-Fi. The technology doesn’t care about borders. People still use it. The only thing a ban does is push it underground, where it’s harder to monitor, harder to tax, and easier to exploit.

What’s Next?

The government knows the ban isn’t working. The National Board of Revenue is quietly reviewing tax rules for crypto. There are rumors of a new bill in the works-one that might finally define digital assets in law. But no timeline. No public consultation. No draft released.

Legal scholars say two paths are possible. Either Bangladesh updates FERA to explicitly include crypto as a regulated asset-giving the ban a legal foundation-or it abandons prohibition and builds a regulatory framework like India or Pakistan.

The first option would mean rewriting a 78-year-old law to cover digital coins. The second would mean admitting the ban failed. Neither is easy. But doing nothing? That’s not an option anymore. The underground market is too big. The demand is too strong. And the technology won’t wait.

What This Means for You

If you’re in Bangladesh and you’re using crypto:

• You’re not breaking a law that clearly defines crypto as illegal-you’re breaking a rule enforced by banks and police, not statute.
• You’re still responsible for taxes on any profit, even if the government doesn’t track it.
• You’re at risk if you use your bank account to buy crypto-your account could be frozen.
• You’re safer using cash-based agents, but those carry their own risks: scams, theft, no recourse.

If you’re thinking about starting:

• Don’t use your bank or debit card.
• Don’t store large amounts on exchanges.
• Keep records of every transaction-you might need them someday.
• Understand that this could change overnight. A new law could come without warning.

Final Thoughts

The Foreign Exchange Act of 1947 wasn’t made for Bitcoin. It was made for gold smugglers and foreign remittance fraud. Trying to use it to ban crypto is like using a horse-drawn cart to stop a bullet train. The technology moved on. The law didn’t.

The real question isn’t whether crypto is legal in Bangladesh. It’s whether the government wants to control it-or just pretend it doesn’t exist. Right now, they’re doing the latter. And while that might feel safer, it’s making the problem worse.

The world is moving toward digital money. Bangladesh is holding on to a 78-year-old rulebook. One day, that rulebook will be outdated. The only question is whether the country will update it-or be left behind.