Pakistan’s central bank and federal government have recommended a complete ban on cryptocurrencies. The report he has prepared has been sent to the law and finance ministries for further review.
Reports have emerged that the Government of Pakistan and its central bank, the State Bank of Pakistan, have decided to outlaw cryptocurrencies. Local media outlets reported on January 12 that the recommendation for an alleged outright ban would impose fines on cryptocurrency exchanges. The ban, as of now, is a recommendation, and it is unclear whether it will be heavily challenged as officials review it.
The Sindh High Court (SHC) is investigating the status of digital currencies, and this is the first time that the central bank has offered a stance on the crypto asset class. The SHC had asked the government to bring in regulation for the asset class in October 2020. With the ban, it appears none of this will be necessary, as there will be no room for crypto within the country.
The primary reasons behind the recommendation are terrorism financing and money laundering, as stated by other countries. However, many other countries have implemented regulation such as KYC procedures to prevent such acts – a far less drastic step.
The recommendations make cryptocurrencies illegal and unable to trade – although it is unclear what the consequences will be for the individual investor. As it stands, the recommendation is quite vague, with the SHC asking the report to be sent to the law and finance ministries for further deliberation.
Those ministries would decide whether the ban would be within constitutional rights. They will also develop a legal framework to make it clear what the penalties can be. Popular Crypto Influencer It has also weighed in saying that “the youth want crypto,” and that the prime minister should voice his opinion.
Pakistan joins the list of countries banning crypto
Pakistan joins nearly ten other countries that have banned cryptocurrencies. Chief among these is China, which last year imposed sanctions on the asset class as it was creating its own central bank digital currency (CBDC). Other countries that have banned crypto include Egypt and Bolivia.
Many countries allow bitcoin and cryptocurrencies in some capacity, although most are operating in a gray area. The rapid growth in the cryptocurrency market has not been accompanied by stable regulation. It is only in the last 12 months or so that countries have started examining the regulation.
Instead of imposing sanctions, countries like South Korea have created a legal framework to ensure that no illegal activity takes place. Their decisions include creating a tax scheme and making registration of exchanges mandatory.