Pakistan central bank recommends outright ban on cryptocurrency

KARACHI – The State Bank of Pakistan (SBP) has recommended a complete ban on all cryptocurrencies, expressing concerns that trading of the digital currency would cause an outflow of foreign exchange from the country.

The central bank made the recommendations in a report submitted to the Sindh High Court on Wednesday.

Last year, the high court ordered the government to form a high-level committee to determine the legal status of cryptocurrencies where Pakistanis are investing millions of rupees due to absence of a clear rules and regulations.

The court had issued the order while hearing a petition against a SBP order dated April 6, 2018, in which it advised banks and payment system operators to “refrain from processing, using, trading, holding, transferring value, promoting and investing in virtual currencies/tokens.”

The committee has identified several risks related to cryptocurrency and made two recommendations to the bank.

“A complete ban on all cryptocurrencies and other related activities in the country,” the bank recommended in a report seen by Arab News. “Unauthorized operations of crypto exchanges to be banned and penalties be imposed by the federal government.”

The committee said that the ban is being recommended in larger interest of consumers as “highly likely that price volatility [would] expose its holders to huge monetary losses.”

“Cryptocurrencies are borderless and there anonymous and pseudonymous nature increases the difficulty of implementing the regulatory and monitoring tools for regulating entity,” the committee said in the report.

The recommendations for a ban on cryptocurrency come amid a $100 million scandal unearthed by the Federal Investigation Agency (FIA) last week.