Yemen's Civil War Shows the Dangers of Crypto

Yemen, home to what the United Nations calls the world's biggest humanitarian crisis, is in a state of civil war.

People from Yemen are often wary of being associated with cryptocurrency, in part because of the Houthis' crypto efforts.

The ongoing civil war in Yemen highlights the contradictions underlying bitcoin adoption: It's difficult for civilians to acquire cryptocurrency without heavily regulated infrastructure that makes them vulnerable to coercion and surveillance.

Most international companies avoid doing business in Yemen due to concerns over U.S. sanctions, which aren't comprehensive like the sanctions against Iran but nonetheless raise compliance questions.

Hamza Alshargabi, a doctor who worked in Yemen until 2012 and briefly mined ether after he immigrated to the U.S., agreed it's "Almost impossible" to get a safe and reliable internet or phone connection in most of Yemen.

According to a report from the Yemen-focused Sana'a Center for Strategic Studies in December 2019 the Houthi militia instructed civilians in northern Yemen to trade in the internationally recognized bills for "An equivalent amount of e-Rials," a cryptocurrency developed by the militant group.

If protests last year in Iran and Lebanon offered a peek at bitcoin's limitations, then Yemen is the full picture of bitcoin usage still relying on government infrastructure.

Cryptocurrency has itself become a weapon in Yemen's civil war.

So Alshargabi sends money to family in Yemen the old-fashioned way instead."You call your friend and say, 'You give my mom $200 and I'll give your mom over here $200.' There are regular people in that type of business," he said.

Despite all these challenges, Alshaabi said he still believes cryptocurrency could be useful inside Yemen.