A rapidly expanding cryptocurrency market in Bangladesh is creating fresh security challenges as extremist groups seek to exploit the same digital payment channels that millions use for legitimate cross-border transfers, a new report has warned.
This has created a parallel payment network that can be used to move funds for extremist groups, it says, raising concerns over the country’s ability to track emerging financing networks.
The June 2026 SecDev report, titled Shared Rails: How Cryptocurrency Funds Both Remittances and Extremism in Bangladesh, says the main risk is not a separate militant crypto network, but illicit transactions hiding inside channels already used by ordinary people.
The report identifies a route beginning with local currency Taka held in the country’s top two mobile financial services providers bKash or Nagad accounts, passing through peer-to-peer traders on Binance and ending in USDT, a dollar-pegged stablecoin, usually on the TRON blockchain. The process can take minutes, while the crypto portion remains largely beyond Bangladeshi regulators’ sight.
Bangladesh ranks 13th globally in cryptocurrency adoption despite having no licensed domestic exchanges and maintaining a restrictive stance towards digital assets, it says.
Several million users are believed to use crypto, driven by cheaper cross-border transfers, dollar access and payments for online work.
SecDev says the pipeline handles seven types of transactions: legitimate remittances and freelancer income, digital hundi, online gambling proceeds, Ponzi-scheme funds, extremist financing, conflict-related payments and capital flight or laundering.
Legitimate transfers account for the overwhelming majority of activity, the report acknowledges. However, suspicious transactions are difficult to isolate because bKash and Nagad can see the Taka side, while offshore platforms see the digital-asset side, but no Bangladeshi agency has a complete view.
The report points to the Ansar al-Islam, an Al-Qaeda in the Indian Subcontinent (AQIS)-aligned group, as evidence that crypto-linked militant financing in Bangladesh is not merely a future threat. Two arrested operatives told the Counter Terrorism and Transnational Crime (CTTC) unit in 2019 that the group had received cryptocurrency from Pakistan and Gulf countries since 2014 and converted funds into Bitcoin for arms procurement, it says.
Ansar al-Islam is a banned militant organisation in Bangladesh.
It also cites about Tk 1.5 crore allegedly received from donors in the United Kingdom and Australia between 2019 and 2022 through hundi and mobile financial service agents.
SecDev stresses that high-value flows still mainly use conventional channels, but argues those networks could switch to stablecoins without major organisational changes.
The report refers to the Deen Islam Foundation case, in which Ansar al-Islam operatives allegedly raised Tk 18 lakh through Facebook using publicly listed mobile financial service accounts before three suspects were arrested in Dhaka in June 2024.
Its central concern is a “hybrid” system in which stablecoins operate alongside hundi and mobile money. Closing one route would not necessarily stop the flow because funds could be redirected through another.
“The state cannot close one without closing the other.”
Bangladesh is also exposed to a wider network stretching through Myanmar to Cambodia and Laos. SecDev describes the Bay of Bengal-Mekong corridor as an illicit-finance arc linked by Telegram, mobile money and USDT, where ransom payments, online gambling, trafficking-linked scam centres and extremist fundraising increasingly touch the same infrastructure.
The regional threat is reinforced by Islamic State Khorasan Province, its Pakistani affiliate and Tehrik-i-Taliban Pakistan (TTP), which the report says solicit cryptocurrency through Telegram and Binance-linked channels. TTP recruitment links involving Bangladesh create conditions for fundraising and recruitment networks to overlap, it adds.
Binance operates in a legal grey zone in Bangladesh. Cryptocurrency trading is prohibited under the Bangladesh laws while no domestic crypto exchange is licensed and banks cannot facilitate crypto-linked payments. Yet platforms like Binance remain widely accessible.
Globally, sanctioned entities received about US$104 billion in cryptocurrency in 2025, while total illicit on-chain activity reached US$154 billion, with stablecoins accounting for most of it, according to the report. It says crypto has evolved into cross-border infrastructure used by migrants, businesses, criminals and sanctioned actors.
However, SecDev cautions that the scale of extremist crypto financing in Bangladesh remains unknown. No publicly attributable wallet address has been identified for Ansar al-Islam, Jama’atul Ansar Fil Hindal Sharqiya or the Bangladesh-linked TTP network, leaving a major intelligence gap.
The report says Bangladesh lacks domestic blockchain-analysis capacity, licensed exchanges that could be compelled to disclose data and laws designed for digital assets. It calls for investment in analytics and international cooperation with financial-intelligence bodies and commercial blockchain firms, rather than broad restrictions that could harm remittances and freelancer earnings.
It also says the BNP government inherited counter-terrorism institutions damaged by allegations of political misuse under the previous administration. Effective action, it argues, will require judicial oversight, transparent intelligence-sharing and safeguards against repression.
Cryptocurrency is unlikely to replace hundi soon, the report concludes. The immediate risk is that both systems will operate together, creating a more resilient and less visible financing network before Bangladesh develops the tools to monitor it.
In an earlier report, SecDev and its local partner Rupantar revealed that AQIS and its affiliates operate a vast digital ecosystem of 1,245 social media channels with 30 million subscriptions to reshape public discourse, normalise extremist ideas, and embed anti-democratic narratives in Bangladesh’s mainstream political and religious debates.
