After a long history of rejecting technology, Pakistan is now moving to legalize cryptocurrency and blockchain. By 2023, Pakistan was one of the many countries with a strong policy of adopting crypto and blockchain technology.
Aisha Ghaus Pasha, the country’s Minister of Finance and Revenue, even went so far as to say that they will “never legalize” crypto in the country.
Today, this policy is about to change as the Pakistani government approves a proposed amendment to the State Bank of Pakistan (SBP) Act, allowing the country’s central bank to issue its first digital currency.
Pakistan’s Major Policy Shift to Crypto
The Express Tribune reports that government sources have indicated a change in policy by the current administration. Plans to amend the SBP Act, one of which is to allow the central bank to introduce digital currency, are in the works.
The SBP has been consistent in its policy of rejecting the adoption of digital currency and has been publishing warnings about its use and promotion. Under the current proposal, the government and traditional financial institutions could add a digital currency.
The idea is to develop a central bank that can manage the country’s finances both physically and digitally.
Pakistan and Its History of Crypto Banning
The state bank of Pakistan has traditionally led the opposition against the use of cryptocurrency, arguing against its volatility and regulatory difficulties.
In 2018, the SBP of Pakistan issued an order prohibiting banks and other financial institutions from providing services in crypto exchanges or handling crypto-related transactions. The 2018 order stated that popular cryptocurrencies such as Ether and Bitcoin are not legal tender in Pakistan.
In the same vein, the country’s major financial policy makers explained that since cryptos offer a high level of anonymity, bad actors can exploit these illegal activities. Due to this SBP order, cryptocurrency activities in Pakistan have been limited, preventing crypto exchanges from doing business.
Crypto Banning Avoiding the ‘Grey List’
The government’s initial reluctance to authorize cryptocurrencies for transactions is linked to conditions set by the Financial Action Task Force (FATF).
According to the team, Pakistan will not be included in its “grey list” if it does not approve cryptocurrency like Bitcoin. With this order, state banks have issued orders to local banks and financial institutions to inform their customers. Additionally, foreign currency is also prohibited as it is illegal and dangerous.
If this proposal passes, the government will introduce amendments to Article 24, which focuses on the issuance, control, and management of digital currencies. Under the SBP Act, only the SBP of Pakistan can issue digital currency and make it legal tender.
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