KARACHI: Pakistan firmly rejected the idea of legalizing crypto trading on Wednesday, citing the potential risks for the country following its removal from the Financial Action Task Force’s (FATF) grey list while pointing out that virtual currencies could be exploited for terrorist financing.
In 2018, the State Bank of Pakistan (SBP) declared that cryptocurrencies such as Bitcoin, Litecoin, and Pakcoin were neither recognized as legal tender nor issued or guaranteed by the government.
During a session of the Senate Standing Committee on Finance and Revenue, Dr. Aisha Ghaus Pasha, the state minister for finance, made a policy statement on the matter, emphasizing that granting permission for crypto trading was not feasible given the recent exit from the FATF grey list.
“Permission to trade in crypto currency cannot be granted,” she said.
Senator Farooq Naek also concurred, highlighting that crypto trading was speculative in nature and should not be allowed.
“Digital currencies can be used for financial terrorism,” he said while calling for a complete ban on them through money bill.
The FATF, an international anti-money laundering watchdog, removed Pakistan from the “increased monitoring list” of countries in October of the previous year. Pakistan had been on the grey list since 2018 due to deficiencies in its financial system.
The SBP officials present at the Senate committee meeting agreed that cryptocurrencies could not be effectively regulated, pointing out that these currencies were already banned in the United States, Canada, and China.
Pakistan experienced a surge in cryptocurrency adoption in recent years and was ranked third in the Global Crypto Adoption Index for 2020-21, according to Chainalysis, a blockchain data platform.
However, the country slipped to sixth place in 2022.
In 2021, a research report released by the policy advisory board of the Federation of Pakistan Chambers of Commerce and Industry revealed that Pakistanis had invested approximately $20 billion in cryptocurrencies.
The report also noted that cryptocurrency and property had been the best-performing asset classes in the country during that year.
Virtual and digital currencies utilize blockchain technology, which is a decentralized ledger recording all transactions across peer-to-peer networks.
