crypto news: Pakistan plans crypto ban; industry players call it big mistake

New Delhi: The government of Pakistan and its central bank are planning to ban the use of cryptocurrencies in the neighboring country, according to reports from local media.

A committee headed by Sima Kamil, Deputy Governor of the State Bank of Pakistan (SBP), the central bank, has proposed banning the use of cryptocurrencies in the country.

Other members included representatives of the Ministry of Finance, the Securities and Exchange Commission of Pakistan (SECP) and the Federal Investigation Agency of Pakistan (FIA).

The introduction is the first time the central bank has taken a clear position. In 2018, SBP issued a circular banning banks from dealing with cryptocurrency exchanges.

The committee submitted the report to the Sindh High Court, which was looking into the cryptocurrency case and ordered its formation. He cited concerns about the use of cryptocurrencies for money laundering and terrorist financing.

The cryptocurrency industry in Pakistan came under scrutiny recently as the FIA ​​intended to investigate the local arm of Binance as part of a suspected fraud, which cost several thousand investors more than $100 million.

The case was revealed by local TV presenter and crypto entrepreneur, Qar Zaka, who wanted the court to rule that cryptocurrencies are legal because a large number of Pakistanis are interested in them.

Zakka tweeted accusing unknown people of receiving death threats and claiming that Imran Khan, the current Prime Minister of Pakistan, is anti-crypto.

In a separate video message, Zakka threatened to strike a democrat in Islamabad to protest against a proposed ban on cryptocurrency, if all legal doors were closed.

Many Pakistanis believe that crypto is the solution to their financial problems. The country faces high inflation rates, heavy debt and low foreign exchange reserves.

On the other hand, industry experts have given Pakistan’s plan to ban cryptocurrency a rejection as they believe that banning cryptocurrencies is not a solution and Pakistan is likely to make a big mistake.

Vikas Ahuja, CEO of CrossTower India, said that cryptocurrency is more than just a currency. It is a new framework for finance and information, and Pakistan has seen a huge rise in investment in cryptocurrencies during the pandemic.

“With their choice to dominate innovation, Pakistan could lose out on an important role in the most important industry in the future,” he added.

Industry experts said that with the aim of banning crypto-assets, Pakistan is forcing such innovation and advancement rather than adopting this new technology.

“We have seen in the past that the crypto ban has not had any significant impact on the crypto industry,” said Shivam Thakral, CEO of BuyUcoin.

He added that one needs to understand the fact that encryption is a global phenomenon and that actions taken by any particular country may not be able to stop a revolution like cryptography and blockchain.

Industry experts also believe it will lead to a brain drain from Pakistan as freelancers and developers will move from the country to bring in roles in the growing space.

Arjun Khazanchi, Co-Founder and CLO, Rooba Finance said the ban on cryptocurrency in Pakistan would not be viewed in isolation. Pakistan’s biggest allies and trading partners, including China and Saudi Arabia, have also banned cryptocurrencies.

“While the Web3 space filled with developers and investors is booming, the sector will suffer and unfortunately the country will not be able to participate and reap the benefits of this fast-growing space.” he added.

However, one should not jump to the gun and lead to any conclusion as early as a central bank which has submitted its statement to the Supreme Court and is subject to appeal.

Pakistan has considered banning cryptocurrency in the past and its government is repeating it again. Sathvik Vishwanath, Co-Founder and CEO of Unocoin, said that passing a law banning crypto is easier than implementing it.

“Pakistan is already on the gray list when it comes to receiving financial aid and this ban will make the country less profitable for the rest of the world even for partnerships or cooperation,” he added.