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SBP recommends complete ban on cryptocurrencies

The SHC has been hearing a case about digital currencies. Source: FILE.

KARACHI: The State Bank of Pakistan (SBP) and the federal government have recommended a complete ban on the use of all cryptocurrencies, according to a report submitted to the Sindh High Court (SHC) on Wednesday.

The SHC has been hearing a case about digital currencies. A two-member bench headed by Justice Karim Khan Agha heard the case when SBP Deputy Governor Seema Kamil submitted the report recommending a ban on cryptocurrencies.

A large number of Pakistanis have invested in virtual currencies despite the absence of laws and rules to regulate digital currencies in the country. The central bank submitted a report after the court directed authorities concerned to submit their replies on regulating cryptocurrency.

It also directed the federal government to set up a committee headed by the federal secretary of finance to determine the legal status of digital currency. The court has ordered that the report be sent to the finance and law ministries to take a final decision on the use of cryptocurrencies and whether the ban would fall under the Constitution.

The report said that cryptocurrency is illegal and could not be used for trade. The report names at least eleven countries including China and Saudi Arabia that have banned cryptocurrencies.

The report also refers to the recent investigation by the FIA against crypto exchanges such as Binance and OctaFx and the risk posed for the investors. The court has adjourned the hearing till April 12.

SBP Deputy Governor Seema Kamil submitted the 38-page report recommending that cryptocurrencies be declared illegal. The report says that cryptocurrency is a virtual business that could be used to finance acts of terrorism and to launder money.

The court said that the Federal Investigation Agency (FIA) and other agencies would continue to act according to their rules. It urged the court to ban “unauthorised operations” of cryptocurrency exchanges and impose penalties against them as some other countries.

Petitioner Waqar Zaka pleaded with the court that cryptocurrencies should be declared legal in the country. Pakistanis have reportedly invested $20 billion in digital currencies, according to Federation of Pakistan Chambers of Commerce and Industry President Nasir Hayat Maggo.

In December 2021, thousands of online investors lost Rs1 billion to a crypto scam. This led to an FIA investigation against Binance, whose wallet had been used to transfer funds to the scammers.

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