ISLAMABAD: The risks associated with cryptocurrencies “far outweigh” the benefits, the Pakistani central bank governor has said, weeks after a mega crypto scam hit the country and the State Bank recommended banning virtual payment systems.
Thousands of Pakistanis lost life savings in a $100 million cryptocurrency scam, Pakistan’s Federal Investigation Agency (FIA) said last month, with investigators estimating that some 37,000 people, mostly from middle-class households in Punjab’s Faisalabad, had been defrauded after investing money in a scheme which promised to multiply funds.
Speaking at the recent MASIC Annual Investment Forum in Riyadh, Pakistan central bank chief Reza Baqir said cryptocurrencies posed a risk to financial and monetary stability due to acute price fluctuations and their distributed and decentralized nature.
“In Pakistan, we as the central bank have reached the conclusion as of now that, for us and in terms of the core objectives of the central bank, the potential risks far outweigh the benefits,” Baqir said, according to a transcript of the speech released by the State Bank of Pakistan (SBP) this week.
“As many of you would be aware, we are not alone in reaching this conclusion. Many large emerging markets, including China, India, Russia, among others have reached similar conclusions.”
Virtual currencies were prone to be used for illegal economic activities and posed the risk of widening the gray economy, capital flight and consumer protection issues, the SBP governor added.
Speaking about why advanced economies had a more “permissive” attitude toward virtual currencies, the governor said: “One reason may be that in many of the advanced economies there is little practical threat that their currency, in many cases one of the major currencies of the world in which trade and finance is denominated, would be replaced by a new virtual currency.”
Another valid concern, according to him, was the impact of virtual currencies on promoting capital outflows, and more generally, capital volatility.
“Since by definition such currencies cannot be monitored, regulators are at a loss to determine the impact on the balance of payments, representing another key risk,” he added.
Pakistan’s central bank declared in 2018 that virtual currencies like Bitcoin were not legal tenders issued or guaranteed by the country’s government.
But despite not being recognized by the SBP, interest in cryptocurrencies has been on the rise. The country ranked third in the global crypto adoption index in 2020-21, after India and Vietnam. The federal chamber of commerce said in a report last year Pakistan had recorded around $20 billion in cryptocurrency value in 2020-21, showing an abnormal increase of 711 percent.
The central bank has not commented on FPPCI’s findings so far but in January recommended banning cryptocurrency, arguing that allowing it would cause capital flight. A committee formed by the Sindh High Court to deliberate on virtual currencies also urged imposing a “complete ban.”
The recommendations came as the court last year heard a constitutional petition filed in 2019, which sought to overturn the central bank’s guidance from 2018 advising banks and payment system operators against processing and investing in virtual currencies.
But proponents of cryptocurrency trade in Pakistan argue that the risks, and scams such as the one unearthed last year, are caused by the absence of a legal framework.
Waqar Zaka, a Pakistani TV host and activist who has filed a court petition in favor of allowing digital currencies, said regulation would help keep fraud at bay.
“I pleaded with the court that people have invested billions of rupees in crypto trade and the government should not declare it illegal,” he told Arab News in an interview last year. “Instead, it should devise a mechanism to legalize the business, and keep a check on transactions.”
Cryptocurrency risks ‘far outweigh’ benefits, Pakistan central bank chief says at Riyadh forum
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Cryptocurrency risks ‘far outweigh’ benefits, Pakistan central bank chief says at Riyadh forum
- Thousands of Pakistanis recently lost life savings in $100 million cryptocurrency scam
- In the wake of the scam, State Bank has recommended banning virtual currencies in Pakistan
Customs seize narcotics, smuggled goods, vehicles worth $4.9 million in southwest Pakistan
- Customs seize 22.14 kg narcotics, consignments of smuggled betel nuts, Hino trucks, auto parts, says FBR
- Smuggled goods enter Pakistan’s Balochistan province from neighboring countries Iran and Afghanistan
ISLAMABAD: Pakistan Customs seized narcotics, smuggled goods and vehicles worth a total of Rs1.38 billion [$4.92 million] in the southwestern Balochistan province on Tuesday, the Federal Board of Revenue (FBR) said in a statement.
Customs Enforcement Quetta seized and recovered 22.14 kilograms of narcotics and consignments of smuggled goods comprising betel nuts, Indian medicines, Chinese salt, auto parts, a ROCO vehicle and three Hino trucks in two separate operations, the FBR said. All items cost an estimated Rs1.38 billion, it added.
Smuggled items make their way into Pakistan through southwestern Balochistan province, which borders Iran and Afghanistan.
“These operations are part of the collectorate’s intensified enforcement drive aimed at curbing smuggling and dismantling illegal trade networks,” the FBR said.
“All the seized narcotics, goods and vehicles have been taken into custody, and legal proceedings under the Customs Act 1969 have been formally initiated.”
In the first operation, customs officials intercepted three containers during routine checking at FEU Zariat Cross (ZC) area. The containers were being transported from Quetta to Pakistan’s Punjab and Khyber Pakhtunkhwa provinces, the FBR said.
The vehicles intercepted included three Hino trucks. Their detailed examination led to the recovery of the smuggled goods which were concealed in the containers.
In the second operation, the staff of the Collectorate of Enforcement Customs, Quetta, intercepted a ROCO vehicle at Zariat Cross area with the local police’s assistance.
The driver was interrogated while the vehicle was searched, the FBR said.
“During interrogation, it was disclosed that drugs were concealed inside the spare wheel at the bottom side of the vehicle,” it said.
“Upon thorough checking, suspected narcotics believed to be heroin was recovered which was packed in 41 packets, each weighing 0.54 kilograms.”
The narcotics weighed a total of 22.14 kilograms, with an estimated value of Rs1.23 billion in the international market, the FBR concluded.
“The Federal Board of Revenue has commended the Customs Enforcement Quetta team for their effective action and reiterated its firm resolve to combat smuggling, illicit trade and illegal economic activities across the country,” it said.
