As suggested by Chainalysis’ Global Crypto Adoption Index, Pakistan plans to ban Cryptocurrency. Despite the country ranking third with the highest number of crypto users, the State Bank of Pakistan submitted a document calling cryptocurrencies illegal in the Sindh High Court.
Why does Pakistan plan to ban Cryptocurrency?
While this isn’t the first time Pakistan plans to ban Cryptocurrency, the High Court is yet to announce its final decision on the legal status of Cryptocurrency.
“On October 20, the Sindh High Court told the federal government to regulate cryptocurrencies within three months. The court directed the government to form a committee headed by the federal secretary of finance to determine the legal status of cryptocurrencies. However, the report, requested by the court to the authorities, declared that Cryptocurrency cannot be used at all. Cryptocurrencies in the country are now regarded as illegal business since they might be a part of terrorist acts and money laundering.”
Deputy governor of SBP Sima Kamil is heading a committee created by the Sindh High Court that expressed concerns about using cryptocurrencies to finance terrorism and money laundering.
The panel includes members from the finance ministries, the telecommunication authority, information technology, and the Security and Exchange Commission.
The Federal Investigation Agency of Pakistan is investigating Binance under the suspicion of a scam that cost thousands of investors more than $100million. The investigation by FIA placed the cryptocurrency industry in Pakistan under a microscope.
Reuters reviewed a report by the committee that said, “The State Bank of Pakistan has concerns over the trading of cryptocurrencies by individuals and entities, as it results in outflow of foreign exchange from the country. After a careful risk-benefit analysis, it emerged that risks of Cryptocurrency far outweigh its benefits for Pakistan.”
What are the consequences of Pakistan banning Cryptocurrency?
While the Sindh High Court recommended a complete ban on Cryptocurrency, various industry experts call it a ‘big mistake.’
Local TV host and crypto entrepreneur Waqar Zaka wants the court to declare Cryptocurrency legal. With the growing number of citizens interested in Cryptocurrency, it may be the solution to Pakistan’s financial problems.
BuyCoin CEO Shivam Thakral said, “We have seen in the past that isolated crypto bans have not made any significant impact on the crypto industry.”
Rooba Finance Co-Founder and CLO Arjun Khazanchi said, “Despite a blossoming web3 space full of developers and investors, the sector would suffer and in the country will unfortunately not be able to participate and reap the benefits of this fast-growing space.”
Unocoin Co-Founder and CEO Sathik Vishwanath said, “Pakistan is already being considered on the grey list when it comes to receiving financial aid and such a ban would only make the country less lucrative for the rest of the world even for partnerships or collaboration.”
However, China and Saudi Arabia, Pakistan’s most prominent allies and trading partners have also banned Cryptocurrency.
Industry experts warn Pakistan of a brain drain as developers and freelancers leave the state for better opportunities.
While Pakistan plans to ban Cryptocurrency, this decision might have some repercussions. Industry experts suggest that banning crypto may not necessarily be the answer and can solve Pakistan’s financial woes.