Dr. Aisha Ghaus Pasha, Pakistan’s Minister of State for Finance and Revenue, has said cryptocurrencies will “never be legalized” in the South Asian country, local media reports. The Minister reportedly suggested at a session of the country’s Senate Standing Committee on Finance that doing otherwise violates the condition upon which the country was withdrawn from the Financial Action Task Force (FATF).
FATF, a global anti-money laundering (AML) and counter-terrorism financing (CTF) body, removed Pakistan from its grey list in October. The list comprises countries the organization considers to have fallen short of its AML and CTF standards.
Sohail Jawad, the Director of the State Bank of Pakistan (SBP), emphasized Pasha’s point during the session, noting that crypto transactions carry high risks and will, therefore, be prohibited. In addition, Pasha during the session said that SBP, the country’s central bank, and the Ministry of Information and Technology have started working towards banning the use of cryptocurrency in the country.
Pakistan Seeks to Ban Crypto
The latest development comes after reports emerged in January 2022 that Pakistan’s apex monetary authority and the government were seeking to ban digital assets. A local media reported that the authorities submitted a document before a Pakistani high court, arguing against virtual currencies.
Earlier in April, a local newspaper Dawn in an article noted that banks in the country regularly sent out messages, warning customers against using their debit or credit card for crypto trading. However, as far back as 2018, SBP issued a circular warning banks and payment firms to avoid processing or trading virtual currencies and tokens.
“Virtual Currencies (VCs) like Bitcoin, Litecoin, Pakcoin, OneCoin, DasCoin, Pay Diamond etc. or Initial Coin Offerings (ICO) tokens are not legal tender, issued or guaranteed by the Government of Pakistan,” the central bank said. “SBP has not authorized or licensed any individual or entity for the issuance, sale, purchase, exchange or investment in any such Virtual Currencies/Coins/Tokens in Pakistan.”
A Global Leader in Crypto Adoption
Despite the Pakistani government’s increasingly tough stance against the use of cryptocurrencies in the country, the asset remains very popular among its citizens. According to Chainalysis’ 2022 data, Pakistan is the sixth biggest crypto adopter in the world, behind Vietnam, Philippines, Ukraine, India and the United States.
Meanwhile, Reuters reported Pakistan's inflation rate rose to a record 36.4% in April as Pakistanis continue to battle the devaluation of the country's currency amidst a volatile political environment. These trends explain why Pakistanis are turning to dollar-backed stablecoins as a hedge against inflation.
However, despite government disapproval of cryptocurrencies, the SBP recently signed new laws to see to the country’s launch of a central bank digital currency by 2025. Furthermore, a group of Pakistani banks recently reached an agreement to develop a blockchain-based know-your-customer platform.
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This article was written by Solomon Oladipupo at www.financemagnates.com.
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