In light of the present financial crisis, some tech-savvy Lebanese are apparently shifting their attention to cryptocurrency.
All local banks were shut down by the government earlier this week owing to ongoing threats to both consumers and staff. Since it is still unclear when the banking institutions will reopen, locals may have begun exploring for alternate financial instruments, such as digital assets.
Closed Lebanese banks are the primary factor behind the increased crypto adoption
After the government closed all domestic banking institutions until further notice, the economic situation in Lebanon deteriorated. Therefore, anyone seeking to withdraw their money has two options: do so at a significant loss, or obtain US dollar-denominated cheques, which are afterward sold for a small portion of their value, currently around 20%.
However, because the value of the Lebanese pound is declining every day, those who want to invest their savings must act swiftly.
The largest stablecoin in the world, Tether (USDT), is the preferred digital asset among local investors, according to a new Reuters report. Since its value is tied to the US dollar, it should remain unaffected by the cryptocurrency market’s well-known volatility.
The Lebanese government has not yet assigned control over the digital asset industry. The majority of domestic investors, who do not trust the activities of the ruling body, do not appear to have a problem with the lack of regulations, nevertheless. It is important to note that cryptocurrency mining prospers in Lebanon as well, largely as a result of the low price of electricity.
A severe economic catastrophe has plagued Lebanon for several decades. Up until 1975, the nation was among the most developed in the Arab region, but a civil war that raged until 1990 reversed that trend.
The military battle wreaked havoc on the nation’s financial system and resulted in significant loss of life and property. While the main political parties continued to polarise society years after the war ended, tons of Lebanese were left in ruins.
Locals’ heightened interest in cryptocurrencies as a result of the current situation is nothing new. Due to unsettling inflation rates or political unrest, citizens of other developing nations, such as Argentina and Turkey, have also joined the bandwagon.