According to Aisha Ghaus Pasha, minister of state for finance and revenue, cryptocurrencies “will never be legalized in Pakistan.”
Even as merchants continue to protect their financial bets against a declining Pakistani rupee, which is partially a result of a tumultuous political climate in the country, the government of Pakistan has strengthened its position against cryptocurrencies.
According to reports, Pakistani Minister of State for Finance and Revenue Aisha Ghaus Pasha told the Senate Standing Committee on Finance on Wednesday that cryptocurrencies “will never be legalized in Pakistan.”
The Financial Action Task Force (FATF), the international financial watchdog, allegedly mandated that cryptocurrencies would not be legalized in order to keep it off the so-called “Grey List” of the organization, according to a local news source citing the minister. Another asserted that Pakistan’s position is invalid since it conflicts with FATF guidelines.
Pasha allegedly said that the State Bank of Pakistan (SBP), the country’s central bank, and the Information Technology Ministry had been instructed to begin work on outlawing cryptocurrencies. The SBP made a strong stance against cryptocurrency for the first time in January 2022 when it announced its intention to outlaw it, according to CoinDesk.
At least two sources informed CoinDesk that banks in Pakistan have begun warning consumers that trading cryptocurrencies is prohibited.
According to a communication that CoinDesk received from a Pakistani bank, “As per regulatory directives from the State Bank of Pakistan(SBP), any remittance of foreign exchange directly or indirectly outside Pakistan to overseas foreign exchange trading, margin trading, and CFD trading apps/websites/platforms through any payment channel are not allowed/permitted by SBP and such payments are inherently risky and illegal.”
A official warning from banks has been sent to clients not to use debit or credit cards for cryptocurrency trading, according to a story in Pakistan’s Dawn newspaper on April 30, 2023. The annual trading volume for Pakistan-based wallets has increased to $25 billion, up from $18 billion to $20 billion a year ago, according to Zeeshan Ahmed, country general manager at Rain Financial, a Gulf-based cryptocurrency trading platform. However, Dawn also reported that cryptocurrencies are becoming more and more popular in the country.
This proposed ban occurs when Pakistan is experiencing political unrest. Imran Khan, the former prime minister of Pakistan, is engaged in a “tense standoff” with police at his residence in the city of Lahore. Imran Khan was detained last week on suspicion of corruption and freed just days later when Pakistan’s Supreme Court decided the arrest was illegal.
Khan believes that authorities intend to detain him once more. The arrest has already sparked widespread demonstrations across the nation.
According to Bloomberg, Pakistan’s rupee dropped 3.3% to an all-time low last week of 300 to the US dollar.
Retailers in Pakistan are using stablecoins as a buffer against the political and financial unrest, according to multiple individuals who spoke with CoinDesk.
People worry about a sovereign default, according to Ali Farid Khwaja, CEO of BlockTech Pakistan and chairman of KTrade Securities, who spoke to CoinDesk. This is especially true given that the Pakistani government has been unable to obtain backing from the IMF.
I think a lot of individuals are purchasing USDT on cryptocurrency exchanges to have exposure to the US dollar, he added. The Pakistani Rupee has done well versus Bitcoin as well. More than 20 million Pakistanis are said to have established accounts on cryptocurrency sites during the crypto boom.
The value of the Pakistani rupee has dropped a “staggering” 57.4% versus the dollar in the last year, according to blockchain investor Bilal Bin Saqib.
“Stablecoins have emerged as the most convenient method for the majority of the population to access the U.S. dollar, as the acquisition of physical dollars is hampered by the current import restrictions,” he stated.