In an effort to mend its war-torn economy, entice investors, and face global financial issues, Syria intends to digitalize its currency and legitimize Bitcoin.
As part of its grand strategy to restore economic stability to its war-torn economy and entice international investment, Syria is contemplating the legalization of Bitcoin and the digitization of the Syrian pound. Aiming to tackle economic instability, inflation, and financial exclusion via the implementation of blockchain technology and cryptocurrencies, the plan was proposed by the Syrian Center for Economic Research (SCER).
The World Bank has recorded a 60% decline in Syria's GDP since 2010, a result of years of conflict and economic mismanagement. People no longer have faith in conventional financial institutions due to the precipitous depreciation of the Syrian pound and the accompanying inflation. The SCER addresses this by outlining a comprehensive plan that incorporates digitalization of the Syrian pound using blockchain technology and the legalization of Bitcoin for financial transactions, trading, and mining. By using assets such as gold, US dollars, and Bitcoin as backing, this strategy hopes to stabilize the currency. Furthermore, in an effort to promote sustainability and avoid monopolies, Syria may mine Bitcoin utilizing its undeveloped energy resources.
Syria is not far from having cryptocurrency, yet it is often associated with questionable applications. Some groups have allegedly used Bitcoin as a means of financing, including the influential Hay'at Tahrir al-Sham (HTS). Some worry that crypto might be misused, despite the fact that the SCER's strategy aims to legitimate and control crypto use. To guarantee openness, safety, and responsibility in cryptocurrency activities, the plan stresses stringent regulation by the central bank.
Legalizing Bitcoin might bring substantial advantages to Syria if put into practice. Millions of Syrians depend on money sent from outside for their livelihood, and this would make remittances much easier. El Salvador's financial ecosystem might benefit from legalization if the government follows a strategy similar to Bitcoin's in attracting foreign investors and collaborations. Additionally, privacy and security would be improved if individuals could keep self-custody of their digital assets.
Syria has been unable to access global financial institutions due to international sanctions, but the decentralized structure of Bitcoin gives them an opportunity to circumvent these bans. Russian, Iranian, and North Korean actions are similar to this method; all three have used cryptocurrency to evade sanctions. But there are geopolitical concerns and the possibility of increased international attention if this strategy is implemented.
Investigations into Bitcoin's potential as a financial stabilizer are on the rise around the world. For instance, as a means of stimulating innovation, Switzerland has considered adding Bitcoin to its national reserves. Similarly, in the face of sanctions, Russian politicians have suggested amassing strategic Bitcoin reserves to support financial stability. Syria may learn a lot from these cases as it gets ready to join the bitcoin market.
There are a lot of obstacles in the way of the plan, despite its promise. Blockchain technology guarantees the transparency of transactions, but it will take time and money to create effective rules that prohibit their exploitation. Strict regulation and oversight are necessary to guarantee that digital currencies only facilitate lawful economic transactions and do not facilitate illicit ones.
A strong digital economy also requires heavy spending on cybersecurity and infrastructure. In addition, the geopolitical situation in Syria makes things more complicated. It is unclear how involved regional countries like Russia, Iran, and Turkey will be in the country's economic recovery in the long run, but they will certainly play important roles in the short term.
In the midst of economic misery, legalizing Bitcoin might provide hope to the Syrian nation. The general public would gain substantially from streamlined money transfers, more openness about government finances, and safekeeping of assets. All of these benefits, meanwhile, are conditional on the government being able to keep its word and impose rules.
Although the proposition put out by the SCER is daring and novel, it is nevertheless a high-stakes venture. Adopting Bitcoin and blockchain technology in Syria has the potential to be a game-changer, leading the country toward economic development, stability, and recovery if the plan is carried out as planned. But if not carried out with caution, the strategy runs the danger of making financial and geopolitical problems much worse.
