Pakistan court calls government for crypto regulations

The executive power will not oppose cryptocurrency investments, a high-ranking government official has told lawmakers in Pakistan. The statement comes as a regional high court has urged the federal government to regulate cryptocurrencies and formed a committee to look into the matter in the coming months.

The ruling was issued by a two-judge bench presided by Justice Muhammad Karim Khan Agha, reported local daily The Express Tribune. The court deliberated on a petition filed to challenge the 2018 statement by the State Bank of Pakistan (SBP), the country’s central bank, in which it announced cryptoassets were not a legal tender in Pakistan, a country with over 220 million people.

“Virtual Currencies/Coins/Tokens … are neither recognized as a Legal Tender nor has SBP authorized or licensed any individual or entity for the issuance, sale, purchase, exchange or investment in any such Virtual Currencies/Coins/Tokens in Pakistan,” the statement said, advising the country’s population to “refrain from indulging in activities relating to mining, trading, exchanging, transferring value, promoting and investing of Virtual Currencies/Coins/Tokens.”

The government official revealed that the monetary authority is currently reviewing the matter which should be referred to the Finance Committee. “The SBP was saying we should move forward in this regard very carefully,” Ali Khan added.

Also, the High Court of Sindh, the highest-level judicial body in the southeastern province of Sindh, granted permission for the committee to consider crypto trading and report its findings to the province’s Ministry of Finance, according to a report by The News International.

Should the committee find crypto trading permissible under Pakistani law, recommendations are to be forwarded to the ministry alongside a draft framework for crypto regulation, subject to modification.

The committee is to be chaired by a deputy governor of the State Bank of Pakistan (SBP) along with officials of Ministries Of Finance, Information Technology, Pakistan Telecommunication Authority and Security and Exchange Commission of Pakistan, according to the report.

The court conceded that a decision whether to provide greater oversight around crypto trading activity in Pakistan came not by choice but from pragmaticism over the potential black market business dealings currently outside government purview.

The change in course comes three years after the State Bank of Pakistan introduced a cryptocurrency ban. In a circular released in the spring of 2018, the SBP stated that virtual currencies like Bitcoin, Pakcoin, Onecoin and tokens from initial coin offerings are not legal tender and prohibited all dealings with them including holding, transferring, and trading.

At the time, the bank further emphasized that no entity or individual was authorized to issue, buy, sell, or exchange the digital coins. But in April of this year, the head of the SBP, Reza Baqir, said that the regulator was studying cryptocurrencies and their potential for bringing transactions taking place off the books into a regulatory framework.