My inbox is full and everyone is asking if cryptocurrencies are banned in Pakistan after the January 12, 2022 hearing of the Sindh High Court or not?
If you want a short answer, then I’d say that Pakistani media is doing Yellow Journalism just to play with public sentiments. Dealing in Crypto is not yet banned in Pakistan.
Let’s take everything step by step so that you can have a clear idea by the end of this article with my views on the whole situation added.
State Bank of Pakistan (SBP) first time with a clear stance on cryptocurrencies
In April 2021, SBP Governor Raza Baqir had said the central bank is taking a look into cryptocurrencies and their potential for bringing transactions happening off the books into a regulatory framework.
In an interview with CNN’s Julia Chatterley, he said, “We are studying that [Central Bank Digital Currency] very carefully.”
He said that it will not only boost the central bank’s efforts for financial inclusion but also allow it to make progress in its fight towards anti-money laundering and countering terrorism financing.
Before this statement, the central bank had prohibited the transactions in digital currencies and declared them ‘illegal tender’.
In a circular issued to banks in 2018, SBP warned the banks that virtual currencies like Bitcoin (BTC), Lite Coin (LTC), Pakcoin, etc. are not legal tender issued or guaranteed by the Government of Pakistan.
On Wednesday, January 12, 2022, SBP has presented a report in Sindh High Court and has taken a clear position on cryptocurrencies.
Moreover, SBP urged the court to not only ban cryptocurrencies but also impose penalties against crypto exchanges operating in the country.
Legal Status of Cryptocurrencies in Pakistan
Now, let’s talk about the legal status of cryptocurrencies in Pakistan.
The country’s constitution of 1973 doesn’t talk anything about the legality of cryptocurrencies. So, does this mean dealing in cryptocurrencies is banned or is it ‘illegal’ in Pakistan?
No, because in democratic states, the practices are declared legal or illegal after parliamentary sessions.
The issue of the country’s adoption of Cryptocurrencies and Blockchain Technology hasn’t been raised and discussed in the parliament so far.
This makes the status of cryptocurrencies in Pakistan in limbo in the absence of laws and rules to regulate the use of these digital currencies for trade.
Details from January 12, 2022 hearing in Sindh High Court
After going through the 38-page report presented by SBP Deputy Governor Seema Kamil and hearing from the petitioner Mr Waqar Zaka, honourable justice highlighted the gap on this matter that has been created in the absence of a law.
Court has involved the federal finance and law ministries to come up with the final verdict.
The ministries have been given time till the next hearing date i.e. April 12, 2022, to decide whether to regulate the cryptocurrencies or to ban ‘lawfully’ once for all.
Role of Media and Yellow Journalism
In a democratic country, media plays a vital role in the betterment of the government but in the case of Pakistani Media, we see more yellow journalism that affects public sentiments to a level that they end up losing in panic.
With the hearing of SHC, media put the headlines that “State Bank of Pakistan (SBP) has banned Cryptocurrencies in Pakistan” which is a False Statement.
SBP has just presented the report and suggested the SHC ban cryptocurrencies in Pakistan.
In both statements, the former has a huge emotional impact on the public as compared to the latter, which is what media wants to generate their traffic.
My View on the Situation
In my opinion, being decentralized by nature, cryptocurrencies shouldn’t be banned by the government of Pakistan instead they should work on the regulation of this new financial market.
By “regulation”, I mean regulating the cryptocurrency exchanges doing business in Pakistan.
This means that a huge population from Pakistan is giving the business to exchanges and regulating cryptocurrencies in Pakistan would help the country to collect taxes (in billions!). Government should get official notices to these crypto exchanges to file the annual returns. Crypto regulation can also benefit the country to pay its loans and be a self-sustainable economy instead of being a ‘borrowed economy’.
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Bottom line: Cryptocurrencies are not banned in Pakistan and the final decision is pending till the next hearing in April 2022. Although, Federal Investigation Agency (FIA) will continue doing crackdown against the P2P Crypto exchangers in the country people of Pakistan can trade in cryptocurrencies till April 2022.