SBP’s committee for ban on cryptocurrency

KARACHI: A committee, constituted under supervision of deputy governor State Bank of Pakistan and other officials to consider functioning of any form of cryptocurrency in Pakistan, recommended a complete ban on cryptocurrency and other related activities in Pakistan.

The committee was constituted by the Sindh High Court under the supervision of SBP’s deputy governor along with officials of ministries of finance, information technology, Pakistan Telecommunication Authority and Security and Exchange Commission of Pakistan to consider issues as to whether any form of cryptocurrency should be permitted under the Pakistani law.

Filing compliance report before the SHC on a petition against restrictions on trading virtual currencies, the committee suggested a complete ban on all cryptocurrency and other related activities in the country. The report stated that after a careful risk benefit analysis, it emerged that the risks of cryptocurrencies far outweigh its benefits for Pakistan. The committee opined that only use of cryptocurrency in Pakistan seems to be speculative in nature where people are being enticed to invest in such coins for short term capital gains. The committee went on to suggest that such enticement may result in the flight of precious foreign exchange as well as transfer of illicit funds from the country.

The committee also suggested a ban on unauthorized operations of exchanges. The committee stated that exchanges like Binance, OctaFx etc should be banned for their unauthorized operations and proportionate and dissuasive penalties be imposed on them by the federal government as some other countries have done. Petitioner Waqar Zaka however opposed the recommendations.

The SHC’s division bench, headed by Justice Mohammad Karim Khan Agha, directed the committee to send a copy of the report to the Ministry of Finance and Ministry of the Law, which shall consider the same at joint meetings and reach final decision whether or not cryptocurrency in any form is to be allowed in Pakistan and, if so, what would be the regulatory framework of such business.

The court directed the Ministry of Finance and the Ministry of Law to place a joint recommendation as to whether business of cryptocurrency in any form can legally be carried out in Pakistan as this was also causing difficulty at this point in time for those persons engaged in such businesses keeping in view constant raids and freezing of bank accounts, which are allegedly being made by the users/dealers of this type of currency by the FIA.

The court directed secretary finance and secretary Ministry of Law or other senior officers well conversant with cryptocurrency from the law minister shall appear in person and file the respective report on April 11.