In light of current political unrest, the Kyrgyz central bank has banned the cross-border payment service offered by #SWIFT . This development was announced by Aida Karabeva, the official representative of the national bank of the Kyrgyz Republic.
What Does the Decision Mean?
According to the representative, the Central Bank's decision was taken to prevent capital outflow from the country and to secure the assets of the country's financial banking sector and financial institutions. Karabeva makes the following statement on the subject:
"The Central Bank is monitoring the situation and as it stabilizes the banking system will continue to operate in normal mode.
In a statement made on 7 October, the Central Banks asked local financial institutions to "suspend their activities and strengthen security measures until the political situation in the country stabilizes".
What Does It Mean for Bitcoin and Cryptocurrencies?
This serves as an example of the need for a decentralized financial system, such as cryptocurrencies, that could be particularly helpful in the event of political unrest and the COVID-19 pandemic. In a country where the rest of the world is trying to access the internet to prevent the exchange of cash or any physical currency, citizens of Kyrgyzstan may have to adopt cash alternatives until the parliamentary elections are agreed and the citizens and the state make a decision.
Although crypto is emerging as a highly sought-after investment around the world given its returns despite volatility, recent developments have had some impact on the market. Recent examples of this were seen in America when CFTC's leading crypto derivatives exchange blamed #BitMEX for failing to prevent money laundering, and subsequently in Spain, John #McAfee was arrested by the US Department of Justice [#DOJ] on allegations of tax evasion.
Cryptocurrency may look like a decentralized system, but it will need a lot more time to get on its feet. However, compared to traditional financing in a situation of socio-political unrest, crypto can provide relief from the sudden shutdown of financial institutions.