State Bank of Pakistan, Government Weighing Crypto Ban

The State Bank of Pakistan (SBP) and the federal government are reportedly weighing a ban on all cryptocurrency transactions in the country, according to Cointelegraph on Thursday (Jan. 13), citing reports from the Sindh High Court (SHC) and SAMAA TV network.

The SHC has been hearing a case about digital currencies and was urged by the SBP to make a move to ban cryptocurrencies and levy fines against crypto exchanges. Lacking laws to regulate digital currencies, the status of crypto in the country has been in a holding pattern.

See also: Russian Central Bank Might Ban Crypto Investments

The federal government was told by the SHC to devise crypto regulations by Jan. 20. In October 2021, the government directed officials to form a committee headed by the federal secretary of finance and submit a report concerning the currency’s legal status.

The report, submitted to the high court on Wednesday (Jan. 12), indicated that cryptocurrency was illegal and could not be used for trade.

The report names 11 countries that have banned cryptocurrencies, including China and Saudi Arabia, and also points to a recent probe by the Federal Investigation Agency in Pakistan that outlined the risk to investors posed by crypto exchanges like Binance and OctaFx.

Pakistan’s central bank also mentioned concerns over money laundering and terrorism regarding crypto.

Read more: RBI Supports a Full Ban on Cryptocurrencies in India

Whether a ban against cryptocurrencies is within the reach of Pakistan’s constitution will be determined by the law and finance ministries, which would also be tasked with constructing a legal framework.

Digital currency and token transactions were initially prohibited in 2018, with the central bank indicating that since bitcoin and related currencies were not legal tender, they couldn’t be issued or guaranteed by the government.

Cryptocurrencies have drawn the attention of thousands of investors in Pakistan who have reportedly invested some $20 billion, according to Federation of Pakistan Chambers of Commerce and Industry President Nasir Hayat Magoon.