The government of Pakistan has announced its plans to ban cryptocurrency services and trading in order to curb unlawful digital currency transactions and adhere to the guidelines of the Financial Action Task Force (FATF).The imposition of the moratorium was partly due to apprehensions regarding the financing of terrorism and money laundering. Pakistan is currently grappling with an economic downturn marked by mounting inflation and debt.
The Minister of State for Finance and Revenue, Aisha Ghaus Pasha, has declared that the use of cryptocurrencies will not be legalized in Pakistan. According to her statement, the State Bank of Pakistan (SBP) and the Ministry of IT & Telecom have initiated the process of blocking cryptocurrency-related services and websites within Pakistan. The Pakistani authorities were directed by the Senate Committee on Finance to prohibit the utilization of cryptocurrencies.
Diverse responses have been observed from both the cryptocurrency community and the general public in relation to the prohibition. Critics have deemed it as an outdated and repressive approach that hinders progress and autonomy.As per the analysis of certain professionals, the ban is likely to adversely impact the economy and society of the nation. This is because it will restrict people from accessing a decentralized and alternate mode of currency that can serve as a safeguard against inflation and devaluation of currency. Last week, Pakistan’s rupee experienced a record low of 300 per dollar, dropping 3.3% against the dollar. This was attributed to political unrest and allegations of corruption against former Prime Minister Imran Khan.
Furthermore, the moratorium will affect the growing population of crypto enthusiasts and investors in Pakistan, who have been using digital currencies to gain access to global markets and opportunities. As per Zeeshan Ahmed, the Country General Manager of Rain Financial, a cryptocurrency trading platform situated in the Persian Gulf, the yearly trading volume of wallets based in Pakistan has observed a rise from $18 billion to $20 billion to $25 billion.
The prohibition will impede the expansion of Pakistan’s cryptocurrency industry and ecosystem, which has observed some encouraging endeavors and undertakings in the past few years. PakCoin, a domestic digital currency launched in 2015, purports to have a customer and merchant base exceeding one hundred thousand nationwide. Urdubit, which was established in 2014 as Pakistan’s inaugural bitcoin exchange, terminated its operations in 2018 owing to regulatory uncertainty.
The imposition of restrictions and warnings on digital currencies by Pakistan dates back to 2015, indicating that the current crypto moratorium is not a recent development. The latest statement, however, seems to be more conclusive and all-encompassing than its predecessors, allowing minimal room for optimism or negotiation. The Pakistani crypto community is currently facing a predicament wherein they have to decide whether to adhere to the moratorium and potentially forfeit their assets and prospects, or to defy it and face the possibility of legal consequences and sanctions.
