Sunday January 29, 2023

Federal secretaries told to submit final recommendations on crypto currency

April 12, 2022

The Sindh High Court on Monday directed the secretaries of federal ministries of law and finance to submit their final recommendations with regard to the functioning of crypto currency in Pakistan so that they could be placed before federal cabinet for a policy decision.

Hearing a petition against restrictions on trading virtual currencies, a division bench, headed by Justice Mohammad Karim Khan Agha, observed that ministries of finance and law had been directed to reach a final decision whether or not crypto currency in any form was to be allowed in Pakistan, and if so what would the regulatory framework of such business be.

The court observed that the ministries had been directed to place join recommendations on whether the business of crypto currency in any form could legally be carried out in Pakistan, as this was also causing difficulty at this point in time for those persons who were engaged in such businesses, keeping in view constant raids by the Federal Investigation Agency and freezing of bank accounts which were allegedly being opened by users/dealers of this type of currency.

It further observed that the interim report had been filed by the two ministries, and that showed that hardly any progress had been made within the last three-and-a-half months in making recommendations in respect of court orders.

The court observed that both the ministries were taking this matter in very lax manner, and at the rate they were going they would not come up with any recommendations for years. It directed the law and finance secretaries to file their final recommendations which they had reached after expediting the consultations between themselves and the relevant stakeholders so that such recommendations might be placed before the federal cabinet, which might make a policy decision in this respect. The court directed the secretaries to submit their reports by June 13.

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

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

Petitioner Waqar Zaka had filed a petition in the SHC against the SBP notification with regard to a restriction on the use of virtual currencies for trade and banking transactions and sought legality of virtual currencies and crypto minting.

He submitted that the SBP through the impugned order had barred the people of Pakistan from carrying on business who were associated with technology-based profession, especially virtual currencies/assets, which was a blatant violation of freedom of business and occupation and could not be justified in any manner. The court was requested to declare the impugned order of the SBP as unlawful as it was restraining the people from carrying on business which was not unlawful by any legal statute in Pakistan and to direct the government to draft a regulatory framework that clearly defined the official stance and mechanism regarding virtual currencies and assets and crypto minting.