Table of Contents
In an apparent hardening of its stance against crypto, Pakistan’s government has stated that it would ban cryptocurrency services operational in the country and would never legalize crypto trading.
Banning crypto was one of the requirements put forward by the Financial Action Task Force (FATF).
A Fresh Ban
The announcement was made by Aisha Ghaus Pasha, the Minister of State for Finance and Revenue, during a session of the Senate Standing Committee on Finance and Revenue on the 16th of May. The minister added that banning cryptocurrencies and crypto services operating in the country was one of the conditions set by the Financial Action Task Force. The task force had only recently removed Pakistan from its gray list. FATF’s gray list consists of countries that the body considers lacking when it comes to Anti-Money Laundering and Counter-Terrorist Financing. However, these countries are viewed as working to ensure compliance and remedy their issues.
Several other officials, such as State Bank of Pakistan Director Sohain Jawad, extended their support to the decision. According to reports, the State Bank of Pakistan and the Technology Ministry were working together to draft the ban legislation. While the Financial Action Task Force cannot impose any sanctions, its findings could influence government and corporate policies globally. In 2022, the State Bank of Pakistan announced that it planned to ban crypto. This was the first clear position the bank had taken on the subject.
Meanwhile, other banks have started reaching out to customers, informing them that cryptocurrency trading is illegal.
“As per regulatory instructions from the State Bank of Pakistan(SBP), any remittance of foreign exchange directly/indirectly outside Pakistan to overseas foreign exchange trading, margin trading, and CFD trading apps/websites/platforms through any payment channel is not allowed/permitted by SBP, and such payments are inherently risky and illegal.”
Crypto Community Voices Disapproval
The Pakistani economy is facing an unprecedented crisis, with the government engaged in tense negotiations to secure a bailout package from the International Monetary Fund (IMF). As a result, FATF compliance when it comes to crypto becomes something of a necessity. However, the crypto community in the country criticized the move to announce a crypto ban. One handle stated that the government officials were destroying the country in the name of the FATF and the International Monetary Fund. Another user summed up his disapproval, stating,
“I pray that government focuses on the right area, which leads to scams and the apps which trap people, instead of banning crypto.”
Another user going by the name of Crypto Arena added,
“People are making handsome income with crypto trading, and Govt wants to take this last hope from the Poor People of Pakistan.”
The ban comes at a time of political turmoil as well, with former Prime Minister Imran Khan locked in a tense standoff with police in Lahore.
Crypto Adoption As Hedge Remains High
Pakistani newspaper Dawn had reported that despite banks formally warning customers against using their debit and credit cards for crypto trading, cryptocurrencies are becoming increasingly popular in the country. According to Zeeshan Ahmed, the country general manager at Rain Financial, the annual volume of cryptocurrency trading has only gone up, rising to $25 billion from $18 billion just a year ago.
The political turmoil and economic uncertainty has seen many Pakistanis convert their salaries into stablecoins to utilize as a hedge. Pakistan’s Rupee has slid to an all-time low of 300 against the USD. Chairman of KTrade Securities and CEO of BlockTech Pakistan, Ali Farid Khwaja, stated that the population is worried about a sovereign default since the government has failed to secure support from the International Monetary Fund.
“I suspect that many people are buying USDT on crypto platforms as a way to get exposure to the US dollar. Even Bitcoin has performed well against the Pakistani Rupee. During the crypto run, reportedly more than 20 million Pakistanis had opened accounts on crypto platforms.”
Pakistan’s currency has fallen over 55% against the dollar over the past year, and stablecoins have emerged as a convenient way to access the US dollar for a majority of the population.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.