A proposal to legalize Bitcoin and digitize the Syrian pound has sparked widespread interest, offering a potential lifeline to Syria’s war-torn economy. However, the initiative, drafted by the Syrian Center for Economic Research (SCER), is not yet officially recognized by Syria’s transitional government.‍

The Proposal: A Path to Stability?

The SCER’s proposal outlines a bold plan to address Syria’s economic challenges, including inflation, financial exclusion, and currency instability. It suggests legalizing Bitcoin for transactions, trading, and mining while leveraging blockchain technology to digitize the Syrian pound. Backing the currency with assets like gold, U.S. dollars, and Bitcoin is envisioned as a way to stabilize its value.

Additionally, the proposal highlights the potential for Syria to harness its untapped energy resources for Bitcoin mining, emphasizing sustainability and preventing monopolies. Comparisons have been drawn to El Salvador’s Bitcoin strategy, with hopes of attracting international investment and simplifying remittances for millions of Syrians relying on money sent from abroad.

Despite its ambitious goals, the proposal is not an official government policy. A key contributor, known as Bam, clarified on Telegram that the SCER is a volunteer-driven initiative, not affiliated with the government or funded by any entity. “This is a grassroots movement driven by very bright and enthusiastic Bitcoin plebs,” Bam wrote.

The SCER brings together Syrian engineers, academics, and entrepreneurs to explore unconventional economic ideas. Renowned economist Dr. Saifedean Ammous, a supporter of Bitcoin and a well-known economist, has also joined the discussions, lending credibility to the initiative.‍

Challenges and Opportunities

The proposal plans to tackle significant obstacles, including international sanctions. While supporters hope for political engagement and sanction relief, critics argue that the initiative risks being misinterpreted as a way to circumvent global restrictions.

Proponents emphasize transparency and regulation to prevent misuse of cryptocurrencies, such as funding illicit activities—a concern given past reports of Bitcoin usage by opposition groups in Syria.‍

Could Bitcoin Help Recover War-Torn Economies?

The recent Bitcoin policy for Syria news circulating across the various social media networks has opened up a discussion on whether Bitcoin or other altcoins could actually help other war-stricken countries as well. 

Speaking to the Byteline, Marina El Hachem, an Associate at BSA Law, commented that cryptocurrencies have the potential to recover the financial stability of countries like Venezuela and Ukraine.

“In Venezuela, hyperinflation decimated the value of the Bolivar, and many turned to Bitcoin and other digital currencies to safeguard their savings. Similarly, in Ukraine, cryptocurrencies became a vital means of maintaining economic transactions during the ongoing conflict.” 

“Bitcoin has proven to be more than just a speculative asset in these regions; it’s an economic tool that enables people to continue their lives despite the collapse of traditional systems. Syria could similarly tap into this potential to stabilize its economy and provide a lifeline to those most affected by the conflict,” stated El Hachem.

Although Bitcoin’s legalization could boost and recover Syria’s economy, BSA Law’s Associate warns about the potential legal and diplomatic challenges. El Hachem claimed, “As Syria remains under heavy international sanctions, western countries and international bodies could view this move as an attempt to evade sanctions, potentially leading to stricter enforcement.” 

Additionally, within Syria, there would be a complex regulatory landscape to navigate. The government would need to align this new digital currency framework with existing laws while ensuring compliance with international anti-money laundering frameworks.”

Whether the plan materializes remains uncertain, but it has already opened new dialogues about the role of cryptocurrencies in Syria’s recovery.