Pakistan Bans Cryptocurrencies Again, Seriously This Time?

Recently, the State Bank of Pakistan (SBP) and the federal government decided to ban all cryptocurrencies. This is not the first ban. In April 2018, SBP banned financial service providers from supporting and using virtual currency transactions, and prohibited domestic and international cryptocurrency-related payments and transfers.

But Khyber Pakhtunkhwa passed a draft resolution in December 2020 to legalize cryptocurrencies and cryptocurrency mining.

And, the Securities and Exchange Commission of Pakistan (SECP) has initiated the process of developing a regulatory framework for cryptocurrencies to govern the trading of digital financial assets in the country.

While talking about prohibition, legalization and starting the regulatory process are on the other hand. What kind of trouble is this going to make?

Cryptocurrency development goes against the ban

In October 2021, the Sindh High Court asked the federal government to regulate cryptocurrencies within three months, and as a result, the SBP and the federal government chose to ban all cryptocurrencies.

Although the above said prohibition, the development of cryptocurrencies in China is contrary to it.

On January 10, 2022, Pakistan’s Federal Bureau of Investigation (FIA) issued an official notice to the crypto exchange Binance in order to investigate a crypto scam involving hundreds of millions of dollars in funds.

Previously, according to documents from the Pakistan Policy Advisory Council, the country could earn billions of dollars from crypto asset holders. Regulation, in order to get this part of the income.

According to the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), as of December 2021, the total value of crypto assets held by Pakistani citizens is about $20 billion, which has exceeded the foreign exchange reserve of Pakistan’s central bank. The Chainalysis report also shows that Pakistan has the third highest cryptocurrency adoption rate in the world.

Late last year, the FIA froze the bank accounts of more than 1,000 people for transactions involving cryptocurrency exchanges worth a total of $288,000, including Binance, Coinbase, and others. The agency also reminded residents that the SBP issued a notice in April 2018: Prohibiting the purchase and sale of cryptocurrencies.

In addition, in April 2019, the governor of the central bank revealed that SBP is conducting research on the concept of digital currency to promote the country's "inclusive financial development, improve the efficiency of financial institutions, and reduce corruption." They also plan to launch a central bank digital currency in 2025 and complete the digital reform of services and technology in 2030.

In addition to the ban, the development of cryptocurrencies in Pakistan is all the way to the sun, and what is the specific development process?

Before the national policy is determined, the advanced provinces have legalized cryptocurrencies and mining

In fact, as early as April 2018, SBP issued a notice prohibiting all domestic financial service providers from supporting and using virtual currencies, as well as domestic and international cryptocurrency-related payments and transfers.

On September 4, 2017, China also issued a ban, which caused the domestic encryption industry to suffer setbacks, but the currency price represented by BTC quickly rebounded. The situation in Pakistan was similar, when the price of PakCoin, the country's first and only cryptocurrency, soared by more than 60%.

Meanwhile, Urdubit, the first nationwide bitcoin exchange, announced its closure in the wake of the ban and urged its customers to withdraw funds as soon as possible. The Urdubit co-founder said the move is aimed at deterring domestic cryptocurrency investments.

But in fact, this does not prevent individual traders from trading cryptocurrencies through other channels, and there are also media reports that the ban has not had the expected effect.

In March 2019, SECP shut down nine cryptocurrency companies that offered Ponzi scheme marketing. But then, the governor of the central bank mentioned that he is studying the concept of digital currency and plans to launch information such as central bank digital currency.