The Central Bank of Pakistan and the Federal Government have recommended that crypto should be completely banned. The report they compiled was sent to the Ministries of Justice and Finance for further consideration.
Reports have emerged that the government of Pakistan and its central bank, the State Bank of Pakistan, have decided to ban cryptocurrencies. Local media reported on January 12 that the so-called comprehensive ban recommendation would impose sanctions on cryptocurrency exchanges. The ban is, for now, a recommendation, and it is unclear whether it will be strongly challenged as authorities review it.
The Sindh High Court (SHC) has reviewed the status of digital currencies, and this is the first time the central bank has taken a position on the crypto asset class. The CHS had asked the government to regulate the asset class in October 2020. With the ban, it looks like none of that will be necessary, as there will be no place for crypto in the country.
The main reasons for the recommendation are terrorist financing and money laundering, as other countries have said. However, many other countries have imposed regulations, such as KYC procedures, to prevent such acts – a far less drastic move.
The recommendations make cryptocurrencies illegal and cannot be traded – although it is unclear what the consequences would be for the individual investor. As it stands, the recommendation is quite nebulous, with the CSS requesting that the report be sent to the Ministries of Justice and Finance for further consideration.
These ministries will determine whether a ban would be consistent with constitutional rights. They will also develop a legal framework, which should provide more clarity as to what the penalties might be. Popular crypto influencers also weighed in, saying “young people want crypto” and that the prime minister should have his say.
Pakistan joins list of countries banning crypto
Pakistan joins a dozen other countries that have banned cryptocurrencies. Chief among them is China, which last year banned the asset class as it prepared its own central bank digital currency (CBDC). Other countries that have banned crypto include Egypt and Bolivia.
Many countries allow bitcoin and cryptocurrencies to some degree, although most operate in a gray area. The rapid rise of the crypto market has not been accompanied by constant regulation. It’s only been in the last 12 months or so that countries have started looking at the regulations.
Instead of proposing bans, countries like South Korea have created legal frameworks to ensure that no illicit activity takes place. Their decisions include the creation of a tax regime and the obligation to register exchanges.
All information contained on our website is published in good faith and for general information purposes only. Any action the reader takes on the information found on our website is strictly at their own risk.