Crypto Regulations in Pakistan
The High Court of Sindh (SHC), the highest judicial body in Pakistan’s Sindh Province, has asked the government to come up with modalities for cryptocurrency regulation.
According to Pakistani English daily The Express Tribune, the SHC gave the instruction while hearing a petition brought before the court challenging the legality of the country’s 2018 crypto ban.
The SHC instructed regulators such as the Securities and Exchange Commission of Pakistan (SECP) and the central bank to work with government agencies such as the Ministries of Information Technology and Law to develop crypto regulations within three months.
Source: Cointelegraph
In April 2018, the State Bank of Pakistan (SBP) declared that cryptocurrencies are not legal and not recognized, issued, or guaranteed by the government.
Earlier this year, the Sindh High Court, the federal government, and the State Bank of Pakistan recommended a complete ban on cryptos. Among concerns is that the asset could be used for money-laundering and terrorism financing and that it will deplete national foreign reserves.
At the Karachi Literature Festival last weekend, Dr. Reza Baqir, the SBP governor, reiterated this stance: “There is no way that a law enforcement agency has visibility on who is doing transactions and for what purpose. And, therefore, around the world, there is a lot of misuses [of cryptocurrency], including human rights violations, money laundering, and many other things.”
Source: B Recorder
The federal government was told by the SHC to devise crypto regulations by Jan. 20. In October 2021, the government directed officials to form a committee headed by the federal secretary of finance and submit a report concerning the currency’s legal status.
The report, submitted to the high court on Wednesday (Jan. 12), indicated that cryptocurrency was illegal and could not be used for trade.
Source: Pymnts
Pakistan’s government is working on a framework for regulating cryptocurrencies like Bitcoin (BTC).
The Securities and Exchange Commission of Pakistan, or SECP, has published a consultation paper on regulating digital assets. Issued on Nov. 6, the paper outlines major concepts for the growing digital finance market in Pakistan and examines the existing regulatory frameworks developed by other global jurisdictions.
In the document, the SECP emphasizes that digital assets are the “start of a new era of digital finance.” According to the regulator, the new era of digital finance “could only be possible by the initiation of a new era that re-invents regulatory regime [or] measures as they are known to the regulators globally today.”
The SECP noted that the consultation paper focuses exclusively on private crypto assets and does not include remarks on a central bank digital currency, or CBDC.
Distinguishing several types of digital assets, the SECP pays particular attention to security tokens and utility tokens. According to the regulator, one of the key advantages of security tokens is the ability to fractionalize each asset, which enables benefits like lowering barriers for investment by retail investors. Other advantages include transparency, improved liquidity, improved clearing and settlement mechanisms, and more automation tools, the paper reads.
Source: Cointelegraph
November 6th, 2020, Pakistan’s Securities and Exchange Commission (SECP) released a paper outlining potential approaches for regulating cryptocurrency in their country.
The SECP worked with the Financial Action Task Force for guidance and is inviting public comment on the matter. The SECP claims to focus on the second approach outlined in the paper, advocating for a ‘let-things-happen’ approach described by the CFCT.
Pakistan aims to embrace the financial benefits of digital assets and innovation without overregulating. One option is to register Initial Exchange Operators by requiring due diligence procedures, ultimately allowing public offerings in capital markets through issuing security tokens.[3] Three approaches to secondary trading are offered: secondary trading on decentralized exchanges; separately registering Digital Assets Trading operations that provide custodian services; or allowing secondary trading on the Pakistan Stock Exchange.
Additionally, The Central Bank clarified that Pakistan has not banned cryptocurrency, easing its position from a statement in 2018 that urged banks and payment providers to refrain from engaging in cryptocurrency in any capacity.
The implementation of a comprehensive regulatory framework seems probable in the near future.
Source: Freeman Law
Pakistan can generate revenues worth at least $90 million (around Rs19 billion) annually through a 15 percent tax on the trade of cryptocurrency under hard-and-fast regulations.
Last year, Pakistan’s total crypto transactions were recorded at $20 billion. Out of which the earned profit was $650 million. “The US and India are collecting billions of dollars through a 30 percent tax on the profit earned from crypto trading. We can start with a 15 percent tax,” said Zeeshan Ahmed, Country General Manager Rain Financial Inc, at a discussion on the role of crypto assets/currency in the economy with journalists.
Source: The News
Pakistani crypto exchange RAIN has urged the country’s finance ministry to regulate and impose a 15% tax on cryptocurrencies.
RAIN told regulators that Pakistan can earn roughly US$90 million in taxes through a capital gains tax on cryptocurrency assets, according to the local media report.
RAIN General Manager Zeeshan Ahmed claimed that other countries, like India and the U.S., are earning billions of dollars in taxes. Those claims could not be independently verified.
Pakistan should also consider legalizing crypto transactions, placing the industry under regulations, Ahmed said
The country’s authorities haven’t yet announced an outright ban on crypto.
The State Bank of Pakistan has repeatedly called for caution, asking the country’s financial institutions to not facilitate transactions in virtual currencies/initial coin offerings (ICOs) and tokens.
Source: Forkast
Cryptocurrencies and property remained top-performing assets in Pakistan this year, with the country recording about $20 billion in cryptocurrency value in 2021, an amount in excess of current federal reserves, according to new research studies.
The central bank declared in 2018 that virtual currencies such as Bitcoin were not legal tender issued or guaranteed by the government. But despite not being recognized by the State Bank of Pakistan, interest in cryptocurrencies has been on the rise.
The country ranked third in the Global Crypto Adoption Index in 2020-21, after India and Vietnam.
Source: Arab News
The federal investigation agency (FIA) of Pakistan has sent an official notice to crypto exchange Binance which is being named in a major scam. The FIA will be investigating the complaints of Binance users who have alleged that the crypto exchange made them transfer funds into unfamiliar third-party wallets. The scam is estimated to have cost people a collective total of around $100 million (roughly Rs. 739 crores). A notice has also been sent to Binance headquarters located in the British overseas territory of the Cayman Islands for answers.
In Pakistan, the notice has been addressed to Hamza Khan, the general manager and growth analyst of the Binance unit there. The investigative authorities have asked Khan to explain the company’s association to “fraudulent online investment mobile applications”, a report by Pakistan’s Dawn News reported.
In the initial probe, Pakistani authorities managed to identify around eleven fraud apps that were collecting the users’ funds unlawfully. The names of these apps are random abbreviations that may or may not mean something. Some of these apps are HFC, MCX, HTFOX, BB001, and AVG86C among others.
Source: Gadgets360
Pakistan’s FIA (Federal Investigation Agency) has announced that they plan on obtaining a court order from the PTA to block cryptocurrency trading websites. The government is stated to be doing so as part of its efforts against fraud and money laundering.
The Director-General of the FIA, Dr. Sanaullah Abbasi, met with State Bank Pakistan’s Cyber Crime Circle Office to discuss current digital security issues and how they can work together more closely going forward.
Source: Bitcoinist
Regulatory Sandbox is a tailored regulatory environment for conducting limited scale, live tests of innovative products, services, processes, and/ or business models in a controlled environment for a limited period of time so as to assess their viability to be launched on full-scale, and to determine the compatible and enabling regulatory environment that will be conducive for the innovative solutions. The objective of these Guidelines is to purposefully meet the above.
Source: PSX
The Securities and Exchange Commission of Pakistan (SECP), the regulator of non-bank financial institutions in the country, recently introduced a regulatory sandbox, inviting companies to propose pilot tests of novel services. It approved the following six: a digital insurance service that complies with Islamic law, a digital insurance broker, equity crowdfunding, a peer-to-peer lending solution, a Robo-advisory service, and a centralized platform for purchasing mutual funds. While equity crowdfunding is currently illegal in Pakistan, SECP will confer with Parliament regarding the possibility of changing this, depending on the outcome of the sandbox trial.
SECP was created by the Securities and Exchange Commission of Pakistan Act of 1997 and began operating as the regulatory board for the non-banking corporate sector and capital markets in 1999.
Source: Micro Capital
