An Unlikely Source of Crypto Innovation: Afghanistan

The Taliban government is suspicious of the internet but a start-up in the country is building blockchain-based tools to transform humanitarian aid.

At a bustling money changer in northwestern Syria, a 46-year-old farmer gripped a plastic card like a lifeline. She had never heard of cryptocurrency, but the card held $500 of it to help restart her farm after nearly 14 years of civil war.

As a teller confirmed the total and cashed out the account, the farmer, Hala Mahmoud Almahmoud, smiled with relief and paused to give thanks. Where had such technology come from, she asked.

The answer surprised her: Afghanistan.

Blockchain-based cash transfers are not the kind of innovation that many people would expect from a country better known for its repressive Taliban leadership, which views the internet with suspicion. But in a nation that has largely turned its back on the world, an Afghan start-up is building tools that it hopes will transform how humanitarian aid is delivered in countries shattered by conflict.

“We’ve lived through these challenges ourselves, so we know how to develop an approach that works,” said Zakia Hussaini, 26, a programmer at the start-up, HesabPay, which designed the technology driving Ms. Almahmoud’s card.

An early proponent of the platform was the United Nations High Commissioner for Refugees. The agency uses it to support more than 86,000 families in Afghanistan in one of the biggest public blockchain aid initiatives in the world. Mercy Corps, which donated the funds to Ms. Almahmoud, worked with HesabPay to expand its reach to include Syria, and programs for Sudan and Haiti are in development.

In Syria, getting money from abroad can be complicated. Cash is scarce, international banks steer clear of the country and remittance firms like Western Union can charge as much as 10 percent in transfer fees. HesabPay allows organizations like Mercy Corps to sidestep those roadblocks.

Sanzar Kakar, the Afghan American entrepreneur behind HesabPay, used to run Afghanistan’s leading payroll processor. But the U.S. withdrawal from Afghanistan in 2021 and the Taliban’s return set off a financial collapse. Sanctions put a halt to international transfers, and the central bank unraveled.

To address the country’s increasing financial insecurity, Mr. Kakar turned to blockchain. He built HesabPay, named after the local word for “account,” as a phone-based app that enabled instant transfers from one digital wallet to another, bypassing banks and the Taliban government. The Afghan government has since granted his business a license to operate officially as a financial institution, he said.

Today, the platform has more than 650,000 wallets in Afghanistan, of which about 50,000 are in regular use, moving approximately $60 million a month in stablecoins backed by the afghani, Afghanistan’s currency.

- Author: Aryn Baker, The New York Times