For years, the State Bank has been anti-BTC, warning against utilizing them as legal money in the country. However, as the story points out, this is the first time the bank has taken a firm stance on the matter and requested a comprehensive prohibition.
The most recent action began when the Sindh High Court requested that the federal government appoint a committee to assess the status of digital currencies in October 2021. Furthermore, it mandated that the Federal Secretary of Finance chair the committee.
This committee has now suggested that the government outright prohibit the use of digital currency. According to the committee’s report, one of its main worries is exploiting digital assets in criminal activity. Pakistan is already on the Financial Action Task Force’s (FATF) gray list for its inadequate anti-money laundering regulations. The committee feels that banning digital currencies would be a smart first step toward regaining FATF approval.
According to Samaa, the study mentioned many particular incidents that prompted the committee to become even more adamant in its opposition to digital assets. The latest $100 million BTC fraud, which impacted over 30,000 Pakistani investors, is one. Binance, an exchange that appears to be at the center of practically every other big crime in the industry, is being investigated for its participation in the fraud.
The Sindh court has asked that the findings be sent to the Ministries of Law and Finance, determining whether or not to prohibit digital currencies in the country. The two ministries have also been asked to investigate if banning BTC would be legal under the Constitution. If that’s the case, they should create a legislative structure that makes digital currencies illegal.
The State Bank’s decision is in direct opposition to a petition filed by Waqar Zaka, a TV personality and digital currency entrepreneur, in the Sindh Court—the same petition that sparked the controversy in the first place.
Zaka had petitioned the court to make digital currencies legitimate, citing that numerous Pakistani investors were investing in the field. According to some estimates, the local economy is worth more than $20 billion. According to the Chainalysis Global Crypto Adoption Index, Pakistan is the third most popular cryptocurrency globally, trailing only Vietnam and India.
Local stakeholders had spoken out against the plan, claiming it would be a huge error to destroy the sector before it ever got off the ground.