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Pakistan to ban cryptocurrencies?

As per the reports, Government of Pakistan along with its central bank has recommended for absolute ban of cryptocurrencies. It was also reported that there would be penalties on crypto exchanges.

In October 2020, the Sindh High Court (SHC) asked the government to make a regulation on digital currencies. These reports highlight the view of the central bank of Pakistan on digital currencies for the first time. It will make cryptocurrencies trade and use unlawful.

SHC asked the government to forward reports to the law and finance ministries for further consideration. Ministries will discuss the constitutionality of the ban and would suggest a policy framework for further clarity. On the other side, crypto influencers are also actively suggesting to the government that the “youth want crypto”.

Pakistan is also contemplating a ban on cryptocurrencies as it is being used in terror funding and money laundering. These views are similar to explanations given by other countries also who have banned the digital currencies. With the ban, Pakistan is likely to join the list of about ten other countries including China, Egypt and Bolivia. However, China is formulating its own central bank digital currency (CBDC).

Bitcoin and cryptocurrencies are allowed in many countries without much clarity on the areas and scope. Some have imposed regulations like KYC procedure, legal framework by South Korea, tax scheme and mandatory registration on exchange to prevent its misuse for illicit activity.

The rapid growth of the cryptocurrency sector has been accompanied by a lack of consistent regulation. Countries have only begun to examine regulation in the last 12 months or so.

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