A high-level committee consisting of the State Bank of Pakistan and the federal government has recommended banning the use of all cryptocurrencies.
Pakistan’s central bank recommended complete crypto ban
On October 20, 2021, the Sindh High Court set up a committee headed by the Deputy Governor of the State Bank of Pakistan (SBP) to investigate cryptocurrency trading/transactions in Pakistan. Local media reported on Tuesday that the committee’s purported recommendation was a complete ban that would include penalties for cryptocurrency exchanges. The ban is only a recommendation so far, and it remains unclear whether law and finance ministries will vigorously challenge it during the regulatory review.
This is the first time the central bank has commented on the cryptocurrency asset class after the court ordered the authorities to submit a report on the use of cryptocurrencies. The main reasons for the recommended ban are terrorist financing and money laundering, similar to other countries. However, many other countries have enacted KYC procedures to prevent such acts. The report also refers to the FIA’s recent investigations into crypto exchanges such as Binance and OctaFx, claiming that these exchanges pose risks to investors.
Pakistan joins list of countries that ban cryptocurrencies
If Pakistan bans cryptocurrencies, it will join the list of about ten countries that have banned cryptocurrencies. The most prominent among them is China, which banned the asset class last year as it prepared its own central bank digital currency (CBDC). Other countries that have banned cryptocurrencies include Egypt, Iraq, Qatar, Oman, Morocco, Algeria, Tunisia, and Bangladesh.
Last week, the Federal Investigation Agency (FIA) asked a representative of Binance, a crypto exchange platform, to provide information about individuals trading on behalf of Pakistanis. It is possible that this incident, in which thousands of online investors in Pakistan lost millions of dollars in a crypto scam, also played a significant role in the recommendation. A few countries have opted to ban crypto for these reasons, but countries like South Korea have put in place legal frameworks to ensure that no illegal activities occur.