The State Bank of Pakistan has clarified its stance on digital assets, saying that it has never declared ownership and trading of the assets illegal. In a press release issued by the central bank, it stated that its earlier warnings about the assets were mainly a precautionary measure.
Over the last few years, the State Bank of Pakistan has issued an advisory, directing banks, micro-finance institutions, development finance institutions (DFIs), electronic money institutions (EMIs), and other financial service providers to refrain from dealing in virtual assets. However, it has now clarified that the directive was never an outright ban on dealing or using the assets, but a measure to slow the negative impacts on residents of the country.
Pakistan central bank clarifies stance on digital assets
According to a statement from the bank, the advisory was to protect the financial institutions and their users.
“The advisory was issued solely to protect our regulated entities and their customers, not because VAs were declared illegal,” the central bank stated.
However, the SBP said that establishing a formal framework will provide the much-needed clarity to the legal status of digital assets in the country, while also ensuring that investors are protected and consumer safeguards are put in place.
The update comes in the wake of a recent briefing to the National Assembly’s Standing Committee on Finance, where it was suggested that trading and holding digital assets in Pakistan remain illegal. According to reports, the committee was told that individuals and firms carrying out cryptocurrency transactions were mandated to report the activities to the Financial Monitoring Unit (FMU), which then forwards it to the Federal Investigation Agency (FIA) for more probes.
During the committee meeting, SBP Executive Director Sohail Jawad addressed the attendees, confirming that the directive, which was first established in 2018, remains in force. However, the central bank has also mentioned that it is currently coordinating with the Finance Division and the recently formed Pakistan Crypto Council (PCC) to design a comprehensive regulatory and legal framework for digital assets in the country.
Attendees query SBP’s clarification amid a wider crypto push
While the SBP were quite clear in their clarification, attendees were not convinced of their stance on digital assets. Finance Secretary Imdad Ullah Bosal maintained at the committee briefing that digital assets were banned. He noted that if they were not banned, those dealing in the assets would not have to face investigations from the relevant authorities, including the FMU and FIA.
The finance secretary also answered questions on why the Pakistan Crypto Council (PCC) was established without consultations with the parliament or the SPB. He mentioned that the task force was created under the directive of Prime Minister Shehbaz Sharif via executive orders. He added that the PCC is taking on an advisory role that aims to propose a legal and procedural path forward for the crypto industry.
The details of the planned allocation of 2,000 megawatts of electricity for crypto mining and AI data centers were also at the briefing, with Committee member Mirza Ikhtiyar Baig discussing government priorities. He mentioned that such an endeavor should have been used to support local industries in Pakistan instead. The country announced the move earlier this month, soaking debates about the country’s crypto stance going forward.
Pakistan is currently ranked in the top ten countries in terms of crypto adoption, with the country previously taking the third spot according to the Global Crypto Index. With over 20 million active users and about $20 billion in crypto transactions, the potential for crypto innovation in the country remains high. The country also sees about $35 billion in annual remittances, with experts noting that it could benefit from blockchain-based financial solutions.
Meanwhile, the Standing Committee on Finance is expected to summon the SBP, Securities and Exchange Commission of Pakistan (SECP), and members of the Pakistan Crypto Council in its next meeting to seek further clarity on the legal and economic implications of digital asset adoption.
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