Pakistan Govt. Suggests a Complete Ban on Cryptocurrency

Despite the lack of legislation and regulations to regulate digital currencies in Pakistan, a large number of Pakistanis have invested in the virtual currency.
Pakistan central bank recommends ban on Cryptocurrency

In Brief:

  • The Federal Govt. and the State Bank of Pakistan submitted a report to ban Cryptocurrency.
  • The report was delivered to a two-judge bench of the Sindh High Court .
  • The hearing has been adjourned until April 12th.

A committee led by the deputy governor of the State Bank of Pakistan (SBP) and the federal government has suggested that cryptocurrency be completely banned, citing the risk of outflows of foreign exchange and illegal funds if it is allowed.

The report was delivered to a two-judge bench of the Sindh High Court (SHC), which was hearing a petition against the digital currency. According to the report, nobody could be allowed to indulge in the digital money business as it was illegal.

For the first time, the central bank has taken a firm stance on cryptocurrencies, urging the SHC to not only prohibit cryptocurrencies but also penalize crypto exchanges.

During the hearing, a significant point was raised: What would the position of cryptocurrencies be in the months before a final judgement is made?

The Federal Investigation Agency (FIA) and other agencies, according to the court, will continue to follow their rules, remarked the court.

The report urged the court to prohibit cryptocurrency exchanges from conducting “unauthorised operations” and to penalise them “like some other countries have done.” Waqar Zaka, a petitioner, asked the court to declare cryptocurrencies legal, claiming that a vast number of Pakistanis were interested in them.

The State Bank of Pakistan on the other hand takes a firm stance. Cryptocurrency, according to SBP Governor Raza Baqir, will not only help the central bank’s efforts to promote financial inclusion but also allow it to make headway in its fight against money laundering and terrorism financing. 

SBP sent a circular to banks in 2018 warning them that virtual currencies such as Bitcoins, Lite Coin, Pakcoin, and others are not legal cash issued or guaranteed by the Pakistani government. The SBP has also stated that no individual or company is permitted to issue, sell, purchase, or exchange virtual currencies, according to the circular.

The central bank issued instructions to banks prohibiting them from trading, holding, or investing in such currencies, as well as reporting any such activities to the Financial Monitoring Unit.

The report will be given to the finance and law ministries, who will make a final decision on the usage of cryptocurrencies, according to the court. The law and finance ministries will examine whether or not a ban on cryptocurrency is permissible under the Constitution.

The hearing has been adjourned until April 12th. Cryptocurrencies in Pakistan have been a burning topic with all the scams, investigations, and regulations turning every now and then. The latest being FIA investigation on crypto exchange Binance over a $100 Million Scam.

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