A Major Shift From Ban To Boom

Total crypto market cap currently at $2.2 trillion. Chart: TradingViewPakistan And Its History Of Crypto Prohibition

Pakistans state bank has traditionally led the opposition against cryptocurrency use, arguing against its volatility and difficulty in regulation.

In 2018, Pakistans SBP issued an order banning banks and other financial institutions from providing services to crypto exchanges or handling crypto-related transactions. The 2018 order specified that popular cryptocurrencies like Ether and Bitcoin are not legal tender in Pakistan.

In the same order, the countrys chief finance policymakers explained that since cryptos offer a high degree of anonymity, bad actors may use these for illicit activities. Because of this SBP order, cryptocurrency activities in Pakistan were limited, preventing crypto exchanges from conducting business.

Banning Crypto To Avoid ‘Grey List’

The governments initial reluctance to approve cryptocurrencies for transactions is connected to the conditions imposed by the Financial Action Task Force (FATF).

According to the task force, Pakistan will not be included in its “grey list” if it does not legalize cryptocurrencies like Bitcoin. With this order, the state banks have issued orders to local banks and financial institutions to inform their customers. In addition, remittances from foreign exchanges are also not allowed since theyre illegal and risky.

If the proposal passes, the government will file amendments to Section 24, which focuses on issuing, regulating, and managing digital currencies. Under the SBP Act, only the SBP of Pakistan can issue a digital currency and make it a legal tender.