Syria Considers Legalizing Bitcoin to Stabilize Economy and Attract Investments
Syria is considering legalizing Bitcoin and digitizing the Syrian pound to stabilize its economy and attract global investments. This initiative, proposed by the Syrian Center for Economic Research (SCER), aims to combat economic instability, inflation, and financial exclusion through blockchain technology and cryptocurrency adoption.
The World Bank reports a 60% economic contraction since 2010 in Syria due to years of war and economic mismanagement. The value of the Syrian pound has sharply declined, diminishing public trust in traditional banking systems. The SCER's strategy includes legalizing Bitcoin for transactions, trading, and mining, along with digitizing the Syrian pound backed by assets like gold, US dollars, and Bitcoin. Additionally, there are plans to utilize untapped energy resources for sustainable Bitcoin mining, preventing monopolies.
Cryptocurrencies are already present in Syria, often associated with controversial uses. Groups like Hay’at Tahrir al-Sham (HTS) have reportedly used Bitcoin for funding. The SCER's plan seeks to legitimize crypto usage while emphasizing strict oversight by the central bank to ensure transparency, security, and accountability.
If implemented, Bitcoin legalization could benefit Syria by simplifying remittances, critical for many Syrians dependent on foreign money transfers. It could also attract international investments similar to El Salvador’s Bitcoin strategy, enhancing the financial ecosystem. Furthermore, allowing citizens self-custody of digital assets would improve security and privacy.
Bitcoin's decentralized nature may help Syria bypass international sanctions that have limited access to global financial systems. This approach parallels actions taken by countries such as Russia, Iran, and North Korea. However, this strategy poses geopolitical risks and may draw further scrutiny from the international community.
Globally, interest in using Bitcoin as a financial stabilizer is rising. Switzerland has considered adding Bitcoin to its national reserves, while Russian lawmakers propose strategic Bitcoin reserves amid sanctions. These examples provide insights for Syria as it navigates the cryptocurrency landscape.
Despite its potential, the plan faces challenges. While blockchain ensures transaction transparency, developing effective regulations to prevent misuse will require time and resources. Ensuring legitimate economic activities without enabling illegal transactions necessitates strict enforcement and monitoring.
A robust digital economy requires significant investment in infrastructure and cybersecurity. Syria's geopolitical situation complicates these efforts, as regional powers like Russia, Iran, and Turkey could influence the economic recovery, although their long-term involvement remains uncertain. Neighboring countries like Lebanon and Turkey, also exploring cryptocurrency adoption, may either support or compete with Syria's initiatives.
For the Syrian population, legalized Bitcoin could provide hope amid economic challenges. Benefits such as simplified remittance processes, enhanced financial transparency, and secure asset custody depend on the government’s capacity to enforce regulations and maintain transparency.
The SCER’s proposal is bold and innovative but carries high stakes. If executed successfully, Syria’s adoption of Bitcoin and blockchain technology could be a turning point, offering a path to economic recovery, stability, and growth. However, without careful implementation, the plan may exacerbate existing financial and geopolitical issues.