The nation’s central bank is calling for an outright ban on all digital currency activity per documents submitted to the Sindh High Court, the country’s biggest legal establishment.
The fight has allegedly been going on since the year 2019. A petition was filed during that time which sought to remove present bank guidance that told banks and standard financial institutions to think twice before getting involved in crypto. The court then sought information from a committee run by the central bank’s deputy governor. The committee has since turned in a report which says the following:
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.
One of the big problems regulators in Pakistan have with crypto is that most of the tokens are minted, issued, and purchased outside the country’s borders. Thus, all Pakistan residents that engage in digital currency transactions are allegedly sending their money abroad rather than keeping it at home. The committee believes there is too much risk in allowing crypto activity to continue within the nation and is thus recommending that all crypto activity be banned from here on out.
The report says: “After a careful risk-benefit analysis, it emerged that the risks of cryptocurrency far outweigh its benefits for Pakistan.”
Pakistan is presently dealing with several financial issues including a devaluating national currency, high inflation, and a budget deficit. The country is also witnessing lessened foreign reserves.
Over the past year or so, bitcoin and its altcoin cousins have proven too harsh for some countries to accept. If Pakistan does go forward with a crypto ban, it will likely be the second country to do so after China, which in the summer of 2021, announced that it was ending all bitcoin and crypto mining projects within its borders as a means of becoming more carbon neutral. From there, the nation put out a second announcement saying that all crypto transactions would soon be outlawed.
The news was shocking to many given that China hosted roughly 65 to 75 percent of the world’s bitcoin and crypto mining firms. Thus, the country was likely to fall behind in terms of blockchain technology and it also stood to lose quite a bit of revenue.