Pak central bank panel recommends complete ban on cryptocurrency

A panel of Pakistan’s central bank has recommended a complete ban on cryptocurrency and other related activities in the country, according to a media report on Thursday, days after a Supreme Court ordered an investigation into a $100 million digital currency fraud.

After the scam became public, the Sindh High Court (SHC) directed the State Bank of Pakistan (SBP) to form a committee of the Deputy Governor of the Bank to investigate the fraud.

Other committee members were from the Ministries of Finance and Information Technology, the Communications Commission and the Security and Exchange Commission.

The court has sought the panel’s opinion on whether any form of cryptocurrency can be allowed under Pakistani law, The News International reports.

In its report, the commission proposed a complete ban on all cryptocurrency and other related activities in the country.

Based on a risk-benefit analysis, it turns out that the risks of cryptocurrencies “far outweigh” their benefits, the paper reported.

The commission noted that cryptocurrency is traded on speculation, where people can be tempted to invest for short-term capital gains.

The commission explained that such temptation may lead to the flight of precious foreign exchange reserves, as well as the transfer of illegal funds from the country.

The commission said that there should be a ban on unauthorized operations of cryptocurrency exchanges, noting that exchanges such as Binance and OctaFx, among others, should be banned for their unauthorized operations, while proportionate and dissuasive penalties should be imposed on them.

Meanwhile, one of the petitioners on the High Committee disputed the recommendations.

The Division Board of the Supreme Committee, headed by Judge Muhammad Karim Khan Agha, directed the committee to send a copy of the report to the Ministry of Finance and the Ministry of Law.

The ministries will look into the same at joint meetings and come to a final decision on whether cryptocurrency, in any form, can be allowed in Pakistan and, if so, what its regulatory framework should be.

The court directed the Ministry of Finance and the Ministry of Law to make a joint recommendation as to whether cryptocurrency business in any way can be carried out in Pakistan legally as this was also causing difficulty at this time for the people involved in – taking into account the FBI raids and their ongoing freezing of bank accounts .

The court directed the finance minister, the law secretary, and other senior officers from the Law Ministry to appear before it and report on the matter on April 11, News International reports.

Last week, Pakistan’s Federal Bureau of Investigation (FBI) discovered a $100 million (17.587 billion rupiah) online scam using cryptocurrency and issued a notification to the local representative of Binance – the world’s largest cryptocurrency exchange. PTI SH IND AKJ IND