Pakistan was in the recent past amongst those countries where crypto adoption was at its highest peak. However, with the dawn of 2022, the crypto industry in Pakistan started to face great difficulties stemming from Court litigation.
Crypto was never recognized in Pakistan either by the Pakistani Government or by the country’s regulating bank i.e. State Bank of Pakistan (SBP). Interestingly crypto business was not considered illegal or restricted activity at any stage in Pakistan. However, there was a case filed against a person in a Pakistani High Court in which the person was accused of crypto investment fraud. It was this case that opened up the debate on the issue of crypto in Pakistan. Because of a lack of knowledge and understanding about cryptocurrencies, the Pakistani High Court sought assistance from SBP.
SBP along with other regulators and crime prevention authorities of Pakistan joined Court proceedings for assisting the Court. SBP told the Court that crypto is not suitable for the Pakistani market and therefore must be banned. The viewpoint of SBP was further endorsed by the Federal Investigation Agency (FIA) which said that crypto is an instrument of committing fraud. However, without passing any orders, the Court adjourned the case for hearing further arguments.
Meanwhile, a meeting was held between the officials of FIA and SBP in which the two authorities discussed cryptocurrencies. A decision was formed in the meeting which called for immediately banning crypto trading and blocking of websites promoting cryptocurrencies.
Now a private financial institution of Pakistan namely Bank Alfalah Limited (BAL) has sent a warning to its customers. In the warning, BAL has warned its customers through SMS alerts that they should immediately stop using BAL’s services for conducting crypto transactions. BAL specifically stated in the message that no legal tender has ever been granted to any of the digital currencies in Pakistan. In addition, SBP, which is the regulating bank, has not granted any license of doing crypto business to any Pakistani individual or an entity. In these circumstances, it would be unwise for anyone to engage with crypto trading or transactions from BAL’s platform.
So far no ban has been imposed on crypto in Pakistan. SBP as well as FIA are awaiting a response from the sitting Government on the issue of crypto. Both authorities have categorically recommended the banning of cryptocurrencies. At the same time, Pakistan Government has been urged by FIA to block the websites which are enticing Pakistanis towards crypto investment. The decisions on both accounts are still awaited from the Government’s end.
Meanwhile, Pakistan’s FIA has taken regulatory action against Binance, which is an online crypto trading firm operating globally. FIA has accused Binance of letting investment fraudsters use its name for their criminal activities involving defrauding people. The Crypto situation is therefore escalating further in Pakistan and it is likely that the crypto ban will be introduced soon.