According to reports, the Pakistani government and central bank, the State Bank of Pakistan, have agreed to prohibit the use of cryptocurrencies.
On January 12, local media sites reported that the alleged total ban recommendation would result in fines for bitcoin exchanges. As of now, the prohibition is merely a recommendation, and it’s unclear whether it will be hotly debated as officials study it.
The Sindh High Court (SHC) has been investigating the legality of digital currencies, and this is the first time the central bank has taken a stance on the asset class. The proposals make cryptocurrencies illegal and restrict trading; however, it is unclear what this means for individual investors.
The recommendation is somewhat unclear, with the SHC proposing that the report be sent to the law and finance ministries for further review. These departments will determine whether or not a ban is legal under the law. They will also develop a legislative framework to clarify potential consequences.
Popular cryptocurrency influencers have also weighed in, arguing that the “youth demand crypto” and the prime minister should speak out. Pakistan has joined the ranks of about ten other countries that have banned the usage of bitcoin.
China is the most visible of these, outlawing the asset class last year and establishing its own central bank digital currency (CBDC). The SHC requested that the government regulate the asset class in October 2020. None of that appears to be necessary with the prohibition, as cryptocurrency will have no place in the country.
Terrorist funding and money laundering are the main reasons for the guidance, consistent with other governments’ statements. On the other hand, other countries have enacted legislation to make such conduct illegal, such as KYC procedures, which is a much less severe approach.
