The decline of the US dollar and the rise of cryptocurrency: A strategic roadmap for Bangladesh
As the global financial system shifts away from dollar dominance and digital assets gain institutional acceptance, Bangladesh faces a choice: maintain its blanket crypto ban or cautiously embrace regulated digital assets, CBDCs and blockchain-based financial infrastructure.
The global economy is currently going through a structural change. Because of geopolitical fragmentation and uncertainty over trade, most nations are currently seeking ways to diversify their forex reserves away from the US dollar.
De-dollarisation has allowed digital currencies to move from being speculative investments to financial instruments used by sovereign states.
Moreover, there has been exponential adoption of cryptocurrencies around the world.
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By 2026, about 559 million people, or almost 10% of the internet population, own crypto globally, especially in emerging markets of the Global South.
State adoption: Countries' investments in crypto
Cryptocurrency has ceased to be an asset purchased mainly by individual investors. Instead, 2025–2026 became a period characterised by sovereign acquisition of crypto – mainly Bitcoin – as an instrument to form strategic reserves, bypass traditional banking networks or use surplus energy sources.
The US: As a result of major policy change in 2026, the US government created a Strategic Bitcoin Reserve and owns the largest known government crypto reserves (~328,372 BTC). President Donald Trump has even gone so far as to announce himself as the "Crypto President."
El Salvador: Being the first country to adopt cryptocurrencies as an official state currency, El Salvador declared Bitcoin legal tender and one of its official national reserves.
Russia: Under Western sanctions, Russia made the official move to crypto to enable international trade despite the blocking of dollar-linked systems like SWIFT.
Bhutan and Ethiopia: These nations practice "state-linked mining," as they mine Bitcoin using their surplus hydropower and turn domestic energy into global digital currencies.
Pakistan: As early as 2025, Pakistan announced its plan for a state-run strategic reserve of Bitcoin due to its high level of retail adoption, ranked third in the world in the 2025 Adoption Index.
India and Vietnam: They use crypto extensively for transactions involving remittances, decentralised finance and savings protection against devaluation of national currencies.
Why Bangladesh should adopt cryptocurrency
Bangladesh currently prohibits decentralised cryptocurrencies from being used in the country. However, following the global trend may provide some significant macroeconomic advantages:
Cost-effective remittances: Remittances form the lifeline of Bangladeshis. Blockchain technology-enabled transactions or stablecoins can help bring down the cost of transferring huge sums by money transfer operators.
Overseas payment reception for freelancers: As Bangladesh does not have PayPal, freelancers have to struggle a lot to receive payments received from their clients overseas. The introduction of crypto will greatly reduce their troubles of receiving international payments.
Easy cashless payments: The general populace can use crypto to make payments within the country safely and securely with fees much lower than traditional mobile financial services.
Diversifying trade settlements: Given the constant strain on foreign exchange reserves, using digital assets or stablecoins can enable Bangladesh to conduct business in non-US dollar transactions with other nations.
Hedging against global fiat inflation: As the US and Pakistan have done, assigning a very small portion of the country's state reserves in Bitcoin as an investment may act as an excellent hedge against global fiat inflation in the long term.
Technological innovation: The development of regulations around digital currencies will encourage investment in blockchain technology development in Bangladesh and prevent brain drain of tech experts to countries where cryptocurrencies are more welcome, such as the UAE and India.
Challenges and strategies to overcome them
|
Challenge |
Threat to Bangladesh |
Mitigation strategy |
|
Capital flight |
Use of retail crypto to transfer money abroad will drain the country's foreign reserves |
Keep the ban on capital exports using retail crypto. Only allow the first-time implementation of crypto for national reserves or a domestic central bank digital currency |
|
Volatility |
The extreme volatility of some assets would ruin domestic businesses if adopted for use in pricing |
Do not legalise decentralised crypto as a means of payment. Only use it for sovereign reserve assets or for business purposes using stablecoins which peg to other major currencies |
|
Criminal activities |
The anonymous nature of cryptocurrency wallets allows illegal transactions |
Make it mandatory for all licensed digital asset services to have strict KYC and AML procedures that connect to the national ID system |
|
Lack of necessary infrastructure |
Digital asset management needs world-class cybersecurity to avoid disastrous hacks |
Create the necessary domestic blockchain forensic capabilities and collaborate with reputable international cybersecurity companies before any launch |
|
Electricity demands |
Bitcoin mining is very energy-intensive. Bangladesh does not have extra cheap electricity like Bhutan |
Clearly ban mining of cryptocurrency by the state or large private businesses. Only work on acquiring and settlement of digital assets |
The global financial system is modernising rapidly. The US dollar is facing slow, steady competition while digital assets are being institutionalised by sovereign states for trade and reserves.
Bangladesh's current policy of blanket prohibition risks isolating its economy from the next generation of financial infrastructure. A prudent path forward requires a phased approach: acknowledging the severe risks of retail capital flight while aggressively pursuing a central bank digital currency and exploring the strategic use of regulated digital assets for international trade settlement.
Syed Tawsif Islam is a student of mass communication and journalism at the University of Dhaka.
