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Image source: https://www.flickr.com/photos/105644709@N08/

Image source: https://www.flickr.com/photos/105644709@N08/

In a new warning issued yesterday by the central bank of Bangladesh, any transaction in “bitcoin or any other cryptocurrency is a punishable offense.” According to a report by Agence France-Presse (AFP), bank officials said that anyone found guilty of using or selling bitcoin in the country could be sentenced to up to 12 years in jail. The action comes in response to a number of media reports in the country detailing bitcoin’s growing appeal.

Although decidedly harsh in tone, the Bangladesh Bank’s isn’t singling bitcoin out for draconian punishment. The country is known for having extremely strict currency controls, largely aimed at preventing money laundering and capital flight. Widely considered one of the most rapidly developing economies in South Asia, Bangladesh is still desperately poor by any definition, with most workers earning less than $1,180 per year. Given that Bangladesh’s 2014 GDP was a projected $173.8 billion, the loss of even a few hundred million can make a visible dent in the economy. Bitcoin, which is both easy to obscure and transmit outside of the traditional banking system, presents a significant threat to central bank’s ability to enforce these laws.

It’s not clear how, or even if, the Bangladesh authorities would pursue bitcoin-related transactions. For all the gravity of the central bank’s statement, the country has been largely unable to enforce its existing money-laundering laws. An estimated 45 to 81 percent of Bangladesh’s GDP comes from the “underground” (black market) economy, and the country is regularly presented as one of the most corrupt governments on the planet. By making bitcoin transactions illegal, Bangladesh’s authorities may have just given one of the most powerful economic weapons in history to their criminal class.

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