Islamabad: 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 top court ordered a probe into a USD 100-million digital currency fraud. After the scam became public, the Sindh High Court (SHC) directed the State Bank of Pakistan (SBP) to constitute a committee under the bank’s Deputy Governor to probe the fraud.
The other members of the panel were from the ministries of finance, information-technology, the telecommunication authority, and the Security and Exchange Commission. The court sought the committee’s opinion on whether any form of cryptocurrency could be permitted under Pakistani law, The News International reported. In its report, the committee suggested a complete ban on all cryptocurrency and other related activities in the country.
Based on a risk-benefit analysis, it has come to light that the risks of cryptocurrencies ”far outweigh” its benefits, the newspaper reported. The committee observed cryptocurrency was traded in speculation, where people could be enticed to invest for short-term capital gains. The committee explained such enticement may result in the flight of precious foreign exchange reserves, as well as transfer of illicit funds from the country. The committee said there must be a ban on unauthorised operations of cryptocurrency exchanges, stating that exchanges like Binance, OctaFx, among others, should be banned for their unauthorised operations, while proportionate and dissuasive penalties should be imposed on them. Meanwhile, a petitioner at the SHC opposed the recommendations.
The SHC’s division bench, headed by Justice Mohammad Karim Khan Agha, directed the committee to send a copy of the report to the Ministry of Finance and Ministry of Law.
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The ministries will consider the same at joint meetings and reach a final decision whether or not cryptocurrency, in any form, can be allowed in Pakistan and, if so, what would be its regulatory framework.
The court directed the Ministry of Finance and the Ministry of Law to place a joint recommendation as to whether the business of cryptocurrency in any form can legally be carried out in Pakistan as this was also causing difficulty at this point in time for those persons engaged in it — keeping in view the Federal Investigation Agency’s constant raids and freezing of bank accounts. The court directed Secretary Finance and Secretary Law, and other senior officers from the Ministry of Law to appear before it and file a report on the matter on April 11, according to the News International report. Last week, the Federal Investigation Agency of Pakistan detected an online fraud of USD 100 million (Rs 17,587 billion) using a cryptocurrency and issued notice to the local representative of Binance – the world’s largest cryptocurrency exchange.