Economic collapse in Yemen drive many towards cryptocurrency despite grave risks

As inflation in Yemen surged to a record 45 per cent in 2021, Aisha Hamid watched the value of her savings steadily erode. Even with inflation now down to about 20.7 per cent, the 34-year-old Sana'a resident says the damage has already been done.

She had saved about $6,000 from her husband’s monthly income and initially bought gold jewellery to preserve its value. But as cryptocurrencies became better known in Yemen after 2017 and surged during the 2021 market boom, she decided in 2023 to invest the entire sum in digital assets to secure her three children's future.

"I sold my gold jewellery to invest in Bitcoin after watching my savings erode from inflation over the years," she told The New Arab. "After making initial gains, I encouraged my friends and relatives to enter the world of digital currencies."

Many Yemenis are doing the same, seeing cryptocurrency as a way to protect their savings from the risk of losing value. As the country's economy continues to deteriorate and its currency weakens, an increasing number of youth and expatriates are turning to cryptocurrency as a financial alternative.

Yemen's economic crisis, banking restrictions on money transfers, and growing digital financial literacy have fuelled the adoption of cryptocurrencies. The country's reliance on remittances is a key factor. Yemen received $3.8 billion in remittances in 2024, according to the World Bank, making it one of the most remittance-dependent economies in the world.

With banking restrictions making traditional transfers costly and slow, some are looking at digital assets as a potential alternative. Digital currencies like Bitcoin and Ethereum have emerged as a perceived safe haven, despite the legal and technical challenges surrounding their use.

A 'safe' investment

Mohammed Khaled, 27, a graduate of Sana'a University's medical school, has had a similar experience to Hamid’s. After a friend advised him to invest in digital currencies, he did some research and concluded they were a reliable investment option.

"I found many Yemenis talking about it on social media," he said to TNA. "An economic researcher told me it would rise dramatically in 2025 and would be stronger than gold as an investment."

He decided to invest. He watched the currency appreciate through most of 2024, but a 2025 slowdown prompted him to withdraw his gains and reinvest them in gold, which was also climbing.

In January, the United States issued economic sanctions on 21 financial and military entities in Houthi-controlled areas.

Mustafa Nasr, head of the Studies and Economic Media Centre, believes American sanctions on groups and entities inside Yemen have played an important role in pushing Yemenis toward adopting cryptocurrency.

"American sanctions on the Houthis have made encrypted digital currencies more widespread in Yemen over the past two years," Nasr said.

"Some groups use digital currencies to bypass restrictions and sanctions, especially regarding financial transfers. These digital assets make a suitable alternative to banking transfer systems, which also face repeated restrictions," he added.

Nasr further noted that millions of Yemenis work in the Gulf and other countries and transfer their earnings to their families inside Yemen, which has pushed some to use cryptocurrency to avoid sanctions and transfer costs.

Hisham Badri, a trader and member of the Sana'a Chamber of Commerce, says cryptocurrencies offer low fees and fast transactions, making them more effective for merchants. He adds that they also protect money from local currency fluctuations, especially given the rial’s collapse.

"Many merchants use e-commerce platforms that accept cryptocurrency," he says. "That opens new doors to expanding their businesses beyond Yemen."

No safety net

Despite the rising interest, experts warn that Yemen's lack of regulatory oversight makes the crypto space ripe for fraud and financial loss. Market volatility remains a major concern; cryptocurrencies can experience massive value swings in hours. Additionally, recovering lost or stolen assets is nearly impossible without legal protections.

This trend is not unique to Yemen. A similar surge in cryptocurrency adoption occurred in Lebanon after 2020 amid its financial crisis, and even global figures, including President Donald Trump, have shown interest in digital currencies. Despite widespread adoption, Yemen's cryptocurrency market has not been free of serious risks, particularly those posed by fraudulent companies.

Duaa Ahmed, 40, worked as a representative for a cryptocurrency company. She had shared an unlikely experience.

"I added hundreds of investors to a company called Doge Coin in 2019," she told TNA. "But in late 2025, all the investors' email accounts were locked. One of the company's external representatives told me that investors had to pay additional amounts to reopen their emails. Everyone refused. I was accused of fraud because this company was impersonating the globally known Dogecoin. The name was a trick to deceive investors."

Economic experts agree that unreliable platforms have proliferated. Numerous Yemenis have fallen victim to fraudulent or unregulated platforms, especially given the absence of a clear legal framework to regulate cryptocurrency trading in the country.

According to many contributors who spoke to TNA, the lack of regulation makes users more vulnerable to significant financial risks when dealing with unreliable platforms.

Shorouk Abdullah, 32, acknowledged that the wallets she had acquired from the same company had become stuck in the system and stopped working. Restoring them would have required another payment, so she advised her colleagues not to reopen them.

"I was one of the most successful investors in Ethereum, but I stopped investing after feeling unsafe because the emails were suspended more than five times," Hanan Mohammed, 38, a government employee, recounted. "That experience was in 2019. After that, I was part of a group that participated in Dogecoin, but it closed the wallets and communications with the representatives stopped."

Regulatory gaps

A local banking source in Aden, speaking on condition of anonymity, said that digital banking sites had been blocked by the local internet provider in Sana'a, creating obstacles for both international and domestic transfers.

Fahmi al-Bahith, a technical expert, said to TNA that when online access to bank accounts is disrupted, it becomes difficult to transfer money to cryptocurrency wallets, creating chaos in the market and increasing doubts about the credibility of digital assets.

"Those who tamper with banking and internet services are not pressuring a political opponent. They are pressuring citizens' lives, increasing poverty and anxiety, and pushing people toward dangerous alternatives like unreliable intermediaries, the black market, fraud, and financial and digital extortion," al-Bahith added.

What al-Bahith said was confirmed by a statement from the Yemeni Banks Association, which spoke of “serious restrictions” hindering customers' access to banking applications through digital and electronic means. The statement warned against turning telecommunications and the internet in Yemen into tools that affect sensitive sectors such as banks and the exchange, as well as the entire economy.

Despite rising indicators of interest in encrypted digital currencies in Yemen, economic expert Nasr emphasises that Yemen's cryptocurrency market faces significant challenges.

"The most prominent is the absence of regulatory legislation," he said. "Yemen has no clear laws to protect investors, which increases the likelihood of fraud. It also lacks a market for bonds and stocks. Encrypted currencies experience major changes in value within a few hours."

This article is published in collaboration with Egab.