Lebanese turn to crypto and decentralization as banks close indefinitely

The Association of Banks in Lebanon (ABL) announced on September 22 the indefinite closure of all banks in the country, as depositors became aggressive about withdrawing their funds.

Meanwhile, young Lebanese are turning to crypto to escape the financial crisis, which has been driving uptake since 2021.

Due to the economic crisis, the government restricted access to deposited funds and closed all banks for a week on September 16.

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The news was also shared on Twitter by Binance CEO Changpeng Zhao. Zhao’s tweet garnered hundreds of replies encouraging crypto ownership and decentralization, which prevents it from shutting down completely like the banks in Lebanon.

Financial crisis

The country has been going through a financial crisis since August 2019, which worsened with the pandemic and the explosion in Beirut in 2020. The International Monetary Fund estimated Lebanon’s loss at around $83 million in 2020 and proposed a plan revival for the country.

According Reuters, the Lebanese pound fell to $15,000 on the parallel market in September 2021, from around $1,500, which was the anchor rate at the start. This prompted depositors to withdraw money despite significant losses, prompting banks to suspend withdrawals.

Crypto in Lebanon

Like residents of most countries facing similar financial challenges, the Lebanese have also turned to crypto for their salvation. A 31-year-old crypto user who lost thousands of dollars to the falling Lebanese pound says Reuters:

“It’s funny when people say crypto isn’t real because what we discovered in Lebanon is that this digital currency is 100 times more real than the lollars we have in the bank,”

Currently, the Lebanese crypto exchange is done through peer-to-peer (P2P) exchanges. Crypto enthusiasts in the region use websites, Telegram and Whatsapp channels that connect buyers and sellers to trade crypto.

The overall amount of trades varies between hundreds and thousands of dollars, and intermediaries take a reduction between 1% and 3% as a commission for making the trade.

The young generation of the country is leading the crypto revolution in the country. After experiencing so many problems with the failure of the centralized financial system, which led to losses and confiscations, Lebanese citizens began to value decentralization and ownership more than anything else.

A 34-year-old crypto enthusiast admitted that he was excited about the growth of crypto in Lebanon. He said:

“Personally, I’m here for the revolution…I can be the custodian of my money and have it in my pocket on my phone,”

Posted in: Binance, Banking

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Lebanese turn to crypto and decentralization as banks close indefinitely

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