Erbil bans cryptocurrency and forex trading, citing fraud risk and lack of regulation

ERBIL — The Erbil General Security Directorate on Tuesday announced a ban on all cryptocurrency and forex transactions in the Kurdistan Region, citing a lack of legal frameworks and growing public losses tied to unregulated trading platforms.

“Trading in all types of electronic and digital currencies is prohibited,” the directorate said in a statement. “Forex and USDT [cryptocurrency] companies are not authorized in the Kurdistan Region or Iraq.”

The decision was based on guidance from the Central Bank of Iraq, the Kurdistan Regional Government’s Ministry of Finance and Economy, and Iraq’s Ministry of Finance. Officials emphasized that cryptocurrencies and forex trading remain unauthorized and unregulated in Iraq.

In 2017, the Central Bank of Iraq formally banned cryptocurrency trading, citing concerns about fraud, market instability, and consumer protection. The prohibition bars banks, financial institutions, and payment service providers from engaging with digital assets.

Cryptocurrencies — including Bitcoin and Ethereum — are decentralized digital currencies traded through blockchain platforms and not issued by central banks. Forex trading, short for foreign exchange, involves buying and selling national currencies like the U.S. dollar, euro, or Japanese yen.

The statement warned that companies promoting forex services or offering courses on digital asset trading are “illegal and unauthorized.”

The crackdown follows a wave of complaints from residents who say they suffered financial losses after investing in such schemes.

“This decision was made after many citizens reported losses and damages through such transactions,” the statement read.

Authorities urged the public to steer clear of these forms of trading. “To avoid financial loss, stay away from such transactions,” the statement continued. “Do not sell your money to project propaganda and advertisements. Distance yourselves from them.”

Officials also issued a warning to companies and individuals promoting cryptocurrency or forex activity online: “We warn all companies and projects not to advertise forex and digital currencies via social media. Doing so will lead to legal consequences.”

Hiwa Osman, a digital currency expert, told 964media that while a small number of people have profited from cryptocurrency trading, the overwhelming majority lose money.

“In the past, a few people made money in crypto markets, but they’re a small group,” he said. “Around 90 to 95 percent of people lose money.”

He cautioned that trading requires in-depth knowledge. “You shouldn’t trade with a broker just because you trust them,” he said.

While cryptocurrency remains legal and widely traded in many countries, Osman noted that in Kurdistan, many participants have suffered significant financial losses.