Crypto “Will Never Be Legalized in Pakistan”, Says Finance Minister

Dr. Aisha
Ghaus Pasha, Pakistan’s Minister of State for Finance and Revenue, has said
cryptocurrencies will “never be legalized” in the South Asia country, local
media reports. The Minister reportedly told a session of the country’s Senate
Standing Committee on Finance that doing otherwise violates the condition upon
which the country was withdrawn from the Financial Action Task Force
(FATF).

FATF, a
global anti-money laundering (AML) and counter-terrorism financing (CTF) body, removed
Pakistan from its grey list in October. The list comprises countries the
organization considers to have fallen short of its AML and CTF standards.

Sohail
Jawad, the Director of the State Bank of Pakistan (SBP), also emphasized
Pasha’s point during the session, noting that crypto transactions carry high
risks and will therefore be prohibited. In
addition, Pasha during the session said SBP, the country’s central bank, and the Ministry of
Information and Technology have started working towards banning the use of
cryptocurrency in the country.

The latest
development comes after reports emerged in January 2022 that Pakistan’s apex
monetary authority and the government were seeking to ban digital assets. A
local media reported that the authorities submitted a document before a
Pakistani high court, arguing against virtual currencies.

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Earlier in
April, local newspaper Dawn in an article noted that banks in the country
regularly sent out messages, warning customers against using their
debit or credit card for crypto trading. However, as far back 2018, SBP issued a circular warning banks and payment firms to avoid
processing or trading virtual currencies and tokens.

“Virtual
Currencies (VCs) like Bitcoin, Litecoin, Pakcoin, OneCoin, DasCoin, Pay Diamond
etc. or Initial Coin Offerings (ICO) tokens are not legal tender, issued or
guaranteed by the Government of Pakistan,” the central bank said. “SBP has not authorized or licensed any individual or entity for the
issuance, sale, purchase, exchange or investment in any such Virtual
Currencies/Coins/Tokens in Pakistan.”

A Global
Leader in Crypto Adoption

Despite the
Pakistani government’s increasing tough stance against use of cryptocurrencies
in the country, the asset remain veyr popular among its citizens.
According to Chainalysis’ 2022 data, Pakistan is the six biggest crypto adopter in the world, behind Vietnam, Philippines, Ukraine, India and the United
States.

Meanwhile, Reuters reported Pakistan’s inflation rate rose to a record 36.4% in April as Pakistanis continue to battle the devaluation of the country’s currency amidst a volatile political environment. These trends explain why Pakistanis are turning to dollar-backed stablecoins as a
hedge against inflation.

However,
despite government disapproval of cryptocurrencies, the SBP recently signed new
laws to see to the country’s launch of a central bank digital currency by 2025.
A group of Pakistani banks also recently reached an agreement to develop a
blockchain-based know-your-customer platform.

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