Crypto Sector Could Suffer in Pakistan as Its Central Bank Looks to Ban Cryptocurrencies: Report

The State Bank of Pakistan has approached the Sindh High Court seeking ban on cryptocurrencies and fines on crypto exchanges operating in the country.

By Radhika Parashar | Updated: 13 January 2022 18:30 IST

Crypto Sector Could Suffer in Pakistan as Its Central Bank Looks to Ban Cryptocurrencies: Report

Photo Credit: Unsplash/ The Artist Studio

The crypto market rose to $3 trillion (roughly Rs. 2,15,66,720 crore) last year

Highlights

State Bank of Pakistan is against cryptocurrencies
The SBP has suggested fining crypto exchanges
The stance on crypto sector remains withheld by Sindh High Court

After El Salvador made Bitcoin a legal tender in September last year, the crypto culture witnessed expansion in several parts of the world. However, the crypto sector could likely encounter obstacles in Pakistan. The central bank of Pakistan is reportedly considering a ban on all cryptocurrencies from operating in the country. As per Chainalysis' Global Crypto Adoption Index, Pakistan ranks third amongst the top 10 countries with the highest number of crypto users.

The State Bank of Pakistan (SBP) has submitted a document to the Sindh High Court, calling cryptocurrencies like Bitcoin “illegal” and unusable for trade purposes, as per a report by Samaa.

The SBP has also reportedly suggested that fines must be levied against crypto exchanges operating in Pakistan.

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The submission handed over to the court by the SBP has cited at least 11 countries, including China and Saudi Arabia, which have imposed restrictions on the crypto space.

As of yet, the court has not announced its final stance on the legal status of cryptocurrencies in Pakistan.

This is not the first time that the SBP has called for a ban on cryptocurrencies and other related activities.

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In April 2018, the apex financial institution of Pakistan had initiated a prohibition on dealing in digital currencies. This did not stop crypto enthusiasts to experiment with the sector regardless.

Recently, crypto exchange Binance has been roped into legal issues in Pakistan. The Federal Investigation Agency (FIA) of Pakistan will probe users complaints alleging that the crypto exchange made them transfer funds into unfamiliar third-party wallets. The scam is estimated to have costed people a collective total of around $100 million (roughly Rs. 740 crore).

Meanwhile, nations like India and Russia, among others, are also mulling over ways to regulate the crypto space.

Since cryptocurrency transactions are decentralised and untraceable in nature, governments around the world fear that they could be used to facilitate unlawful activities such as money laundering and terror financing. The volatility of the crypto market is another issue for authorities to observe before legalising the sector.

The excessive electricity consumption linked to crypto mining has also become a matter of concern in many parts of the world, including Iran and Kazakhstan.

Despite the roadblocks, the cryptocurrency market rose to $3 trillion (roughly Rs. 2,15,66,720 crore) last year, the highest it has even been.

Interested in cryptocurrency? We discuss all things crypto with WazirX CEO Nischal Shetty and WeekendInvesting founder Alok Jain on Orbital, the Gadgets 360 podcast. Orbital is available on Apple Podcasts, Google Podcasts, Spotify, Amazon Music and wherever you get your podcasts.

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Further reading: Crypto, Cryptocurrency, Crypto Ban, Pakistan

Radhika Parashar

Email Radhika

Radhika Parashar is a senior correspondent for Gadgets 360. She has been reporting on tech and telecom for the last three years now and will be focussing on writing about all things crypto. Besides this, she is a major sitcom nerd and often replies in Chandler Bing and Michael Scott references. For tips or queries you could reach out to her at RadhikaP@ndtv.com. More