The Securities and Exchange Commission of Pakistan has published a paper discussing cryptocurrency regulation in the country. Meanwhile, the central bank has reportedly confirmed that there is no cryptocurrency ban.
Pakistanâ€™s Crypto Regulation in the Works
The Securities and Exchange Commission of Pakistan (SECP) has published a position paper on the regulation of cryptocurrency trading platforms.
Besides discussing definitions and concepts of cryptocurrencies, the paper outlines different regulatory approaches adopted globally, including the recommendations by the Financial Action Task Force (FATF), and regulations in Malaysia, Hong Kong, and the U.S. It also details how cryptocurrency could be recognized in Pakistan and regulatory proposals. â€œThis consultation paper focuses exclusively on non-government or non-central bank issued crypto assets and not on central bank digital currencies [CBDCs],â€ the paper notes.
The paper discusses two approaches available for regulating cryptocurrencies. Firstly, cryptocurrency can be regulated and restricted according to existing regulations â€œand may in some instances even entail outright banning,â€ the SECP wrote.
Secondly, cryptocurrency can be regulated â€œbased on the conjecture of â€˜let-things-happenâ€™ approach, described by the Commodity Futures Trading Commission (CFTC) as the â€˜do-not-harmâ€™ approach â€¦ where the financial sector is considered as dynamic and the associated need to innovate is strongly emphasized.â€
The SECP says its position paper â€œis mainly prepared based on [the] second approach,â€ adding that it â€œintends to hold multiple discussion session and welcomes any input/comments.â€ The position paper can be found here.
No Crypto Ban
Meanwhile, the State Bank of Pakistan has reportedly clarified that cryptocurrency is not banned. The central bankâ€™s lawyer recently told the Sindh High Court that the bank issued a warning about dealing in cryptocurrencies, including bitcoin, but did not ban them.
Pakistanâ€™s central bank issued a circular dated April 6, 2018, advising financial institutions, including banks and payment service providers, â€œto refrain from processing, using, trading, holding, transferring value, promoting and investing in virtual currencies/tokens.â€ It further states that financial institutions â€œwill not facilitate their customers/account holders to transact in VCs/ICO tokens. Any transaction in this regard shall immediately be reported to [the] Financial Monitoring Unit (FMU) as a suspicious transaction.â€
This circular is similar to the one issued by Indiaâ€™s central bank, the Reserve Bank of India (RBI), which imposed a banking ban on the crypto industry. The RBI circular was quashed by Indiaâ€™s supreme court in March and the banking ban was lifted in India.
Waqar Zaka, a television presenter who has been actively petitioning to lift the ban imposed by Pakistanâ€™s central bank, said that the countryâ€™s crypto ban has been misreported by the media and the Federal Investigation Agency (FIA) has falsely been arresting people for possessing bitcoin. Emphasizing that the arrests must stop, Zaka explained that â€œParliament has not passed any law to banâ€ bitcoin or other cryptocurrencies in Pakistan.
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