crypto news: Pakistan plans crypto ban; industry players call it big mistake

Synopsis

The submission is the first time a clear position has been taken by the central bank

In 2018, SBP issued a circular prohibiting banks from dealing with cryptocurrency exchangesNew Delhi: The government of Pakistan and its central bank are planning to ban the use of cryptocurrencies in the neighboring state, reports from local media suggest.

A committee headed by Sima Kamil, the deputy governor of the State Bank of Pakistan (SBP), its central bank, has proposed to ban the use of cryptocurrencies in the country.

Other members included representatives from the Ministry of Finance, the Securities and Exchange Commission of Pakistan (SECP) and the Federal Investigation Agency of Pakistan (FIA).
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The submission is the first time a clear position has been taken by the central bank. In 2018, SBP issued a circular prohibiting banks from dealing with cryptocurrency exchanges.

The committee submitted the report to the Sindh High Court, which was hearing a case about digital currencies and ordered its formation. It cited concerns on the use of cryptocurrencies for money laundering and financing terrorism.

The crypto industry in Pakistan has been under scrutiny lately as FIA intended to investigate the local arm of Binance as part of a suspected scam, which has cost several thousand investors more than $100 million.

The case was brought to light by a local television host and crypto entrepreneur, Waqar Zaka, who wanted the court to rule that cryptocurrencies be declared legal as a large number of Pakistanis are interested in them.

Zaka tweeted accusing anonymous people to get death threats and alleged that Imran Khan, the sitting Prime Minister of Pakistan, is anti crypto.

In a separate video message, Zaka threatened to hit Democracy Chowk in Islamabad to protest against the proposed ban on cryptocurrency, if all legal doors are closed.

Many Pakistanis think crypto is the solution to their financial woes. The country is facing high inflation, heavy debts, and low foreign reserves.

On the other hand, industry experts have given Pakistan’s plan to ban crypto a thumbs down as they believe that banning crypto is no solution and Pakistan is likely to make a big mistake.

Vikas Ahuja, CEO of CrossTower India, said that cryptocurrency is more than just a currency. It is a new framework for finance and information and Pakistan has seen a significant rise in crypto investment during the pandemic.

“With their choice of control over innovation, Pakistan could lose out on an important role in the future’s most important industry,” he added.

Industry experts said that with an intention to ban crypto assets, Pakistan is forcing out such innovation and advancement instead of embracing this new technology.

Shivam Thakral, CEO, BuyUcoin said “We have seen in the past that isolated crypto bans have not made any significant impact on the crypto industry.”

One needs to understand the fact that crypto is a global phenomenon and action taken by any particular country may not be able to stop a revolution like crypto and blockchain, he added.

Industry experts also believe that it would result in brain drain from Pakistan as freelancers and developers will move ouf the state to fetch roles in the growing space.

Arjun Khazanchi, Co-founder and CLO, Rooba Finance said that the crypto ban in Pakistan shall not be viewed unidimensionally. Pakistan’s biggest allies and trading partners including China and Saudi Arabia have also banned crypto.

“Despite a blossoming web3 space full of developers and investors, the sector would suffer and in the country will unfortunately not be able to participate and reap the benefits of this fast growing space.” he added.

However, one should not jump the gun and lead to any conclusion so early as the central bank which submitted its statement to the High court and is subject to appeal.

Pakistan has considered banning cryptocurrencies in the past and their government is reiterating it now again. Passing a law banning cryptos is easier than enforcing it, said Sathvik Vishwanath, Co- Founder and CEO, Unocoin

“Pakistan is already being considered on the grey list when it comes to receiving financial aid and such a ban would only make the country less lucrative for the rest of the world even for partnerships or collaboration,” he added.

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Updated: 01/14/2022 — 03:00

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