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Pakistan announces a ban on cryptocurrencies

Pakistan is coming up with new laws to speed up CBDC launch

Despite a volatile political situation in the country, the government of Pakistan has further strengthened its stance against cryptocurrencies, while retailers are still protecting their financial positions against a depreciating Pakistani rupee.

Cryptos will “never be legalized” in Pakistan

According to local reports, Finance and Taxation Minister Aisha Ghaus Pasha stated during a meeting with the Permanent Finance Commission of Pakistan that cryptocurrencies “will never be legalized in Pakistan”.

This ruling was made in connection with the Financial Action Task Force (FATF)’s demand not to legalize cryptocurrency in order to remain on the international financial watchdog’s “Gray List”. Local news sources reported that Pakistan takes this position due to the fact that it violates the terms of the FATF.

Minister Pasha also reportedly stated that Pakistan’s central bank, the State Bank of Pakistan (SBP), along with the Ministry of Information Technology, has been ordered to begin banning cryptocurrencies. In January 2022, the SBP clearly stated its position on this new financial technology for the first time by announcing its intention to ban crypto.

Many types of payments not allowed by SBP

According to at least 2 sources, banks in Pakistan have started informing customers that cryptocurrency trading is illegal.

A message from a bank in Pakistan stated: “As per legal instructions from the State Bank of Pakistan (SBP), any transfer of foreign currency directly/indirectly outside Pakistan to Overseas Forex trading, margin trading and CFD trading apps/websites/platforms through any payment channel is also not permitted/permitted by SBP, and such payments are inherently risky and illegal.”

On April 30, 2023, Pakistani newspaper Dawn reported that banks have formally warned their customers against using debit or credit cards to trade crypto. However, Dawn also reported that cryptocurrencies are growing in popularity in the country, with annual trading volume of Pakistan-based wallets rising to $25 billion, up from $18 billion to $20 billion a year earlier. Zeeshan Ahmed, country general manager at Rain Financial, a Gulf-based trading platform for cryptocurrencies, confirmed this growth.

Attempted ban has taken place

At a time of political turmoil in Pakistan, a ban has been attempted. Former Prime Minister Imran Khan, who was recently arrested on corruption charges and released days ago after Pakistan’s Supreme Court declared the arrest illegal, is currently in a “tense standoff” with police at his home in Lahore.

Khan claims that the police are planning to re-arrest him, and this arrest has already sparked massive protests across the country.

At the same time, the Pakistani rupee fell 3.3% last week to a historic low of 300 rupees per dollar.

Financial instability leads to more purchases of stablecoins

Due to the political and financial instability, Pakistani retailers have converted their salaries into stablecoins as a form of protection.

Ali Farid Khwaja, chairman of KTrade Securities and CEO of BlockTech Pakistan, stated that people are concerned about the national debt, especially as the Pakistani government has failed to secure support from the International Monetary Fund.

“I suspect that many people buy USDT on crypto platforms as a way to gain exposure to the US dollar,” he said. “Even Bitcoin has performed well against the Pakistani rupee. During the crypto rally, more than 20 million Pakistanis reportedly opened accounts on crypto platforms.”

According to Bilal Bin Saqib, a blockchain investor, the value of the Pakistani rupee has fallen by as much as 57.4% against the dollar over the past year. In conclusion, he stated the following:

The majority of the population has found that stablecoins are the most convenient way to access the US dollar, as current import restrictions prevent physical dollars from being obtained.

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