PESHAWAR: The Peshawar High Court (PHC) has directed the federal government to formulate a policy within two months on the prevention of illegal trade and transactions involving digital/cryptocurrency across Khyber Pakhtunkhwa and the rest of the country.
The directive came during the hearing of a petition before a two-member bench comprising Justice Syed Arshad Ali and Justice Dr Khurshid Iqbal.The petitioner, Barrister Huzaifa Ahmad, appeared before the court, while Deputy Attorney General Bilal Durrani represented the federation.
The petitioner informed the court that in this era of technology, the concept of digital currency had emerged, where money was transferred through digital means. However, there
are no laws to regulate or control such currencies.
He said the State Bank of Pakistan had declared online cryptocurrency trade illegal in a notification issued in 2018. Despite this, he added, many individuals continued to operate on various digital platforms.
According to the petitioner, not only were crypto and forex trading coaching centers and training academies operating in Khyber Pakhtunkhwa, but they were also being promoted through social media platforms like TikTok, Facebook, and YouTube. He said these academies are functioning illegally without any government monitoring.
He added that operators and traders could collect and withdraw funds online and could even freeze user funds.The petitioner alleged that the relevant authorities were aware of this illegal online trading but had taken no action. He said that letters were also sent to the relevant institutions, but no steps were taken.
The petitioner pointed out that under the laws of the Securities and Exchange Commission of Pakistan, only registered securities exchanges were permitted, whereas these digital applications and training academies were unregistered. They could, however, serve as a source of revenue for the Federal Board of Revenue (FBR) through taxation.
He warned that digital currencies posed risks of money laundering and terror financing. Such trading could threaten state security as it may be used for terrorism, gambling, and other anti-state activities. Therefore, he said, it was the responsibility of both federal and provincial governments to ban such illegal businesses and shut down institutions involved in digital crypto and forex trading.
The petitioner requested the PHC to instruct the government to legislate on this matter and direct institutions like the Federal Investigation Agency to take action.The deputy attorney general informed the court that the government was in the process of drafting relevant legislation and sought one month. Justice Arshad Ali granted two months instead and adjourned the hearing, instructing the federal government to present a report to the court after finalizing the policy.
