As estimated by Triple A, over 9.0 million people, 4.1% of Pakistan’s total population, currently own cryptocurrency, in this potential ground for crypto ecosystem implementation and development, Pakistan plans to ban Cryptocurrencies. As highlighted by Minister of State for Finance Aisha Ghaus Pasha, the government of Pakistan will never legalize cryptocurrency.
She further mentioned that the State Bank of Pakistan in collaboration with the IT ministry is working on the implementation of the same. This announcement happened during the session of the Senate Standing Committee on Finance and Revenue.
Pasha pointed out that a ban on cryptocurrencies was one of the major prerequisites mentioned by the Financial action task force (FATF), which led to the removal of Pakistan from the greylist in October. It is important to note that countries that are considered a haven for supporting terror funding and money laundering are put on the FATF gray list. This inclusion serves as a warning to the country that it may enter the blacklist.
Central Bank’s Director Sohail Jawad also said that the cryptocurrency global market has shrunk From $2.8 trillion to $1.2 trillion. He said over 16,000 types of cryptocurrency have been created so far. He also informed that FIA and Financial Monitoring Unit (FMU) collaborated to crack down on Pakistani investment in cryptocurrencies. SBP officials coined cryptocurrencies as “Fraud”.
Bitcoin and cryptocurrency mining were flourishing in Pakistan until April 2018 when the government banned trading and mining virtual currencies. There was still a growing mining industry even though many mining farms have been shut down since this ban was implemented.
Interestingly, in 2020, Pakistan’s Securities and Exchange Commission (SECP) released a paper outlining potential approaches for regulating cryptocurrency in the country. The SECP aimed at working with the Financial Action Task Force for guidance on the matter. The SECP claims to focus on the second approach outlined in the paper, advocating for a ‘let-things-happen’ approach.
Earlier, Pakistan aimed to embrace the financial benefits of digital assets and innovation without overregulating. One option was given to register Initial Exchange Operators by requiring due diligence procedures, ultimately allowing public offerings in capital markets through issuing security tokens. Three approaches to secondary trading were offered: secondary trading on decentralized exchanges; separately registering Digital Assets Trading operations that provide custodian services; or allowing secondary trading on the Pakistan Stock Exchange.
In these developments, the recent announcement of the minister will act as a major hurdle in the establishment and implementation of the crypto ecosystem. Many Pakistanis think crypto is the solution to their financial woes. The country is facing high inflation, heavy debts, and low foreign reserves and is technically at the default stage. Industry experts have given Pakistan’s plan to ban crypto a thumbs down as they believe that banning crypto is no solution and Pakistan is likely to make a big mistake.
