October 3, 2023

Pakistan’s Central Bank Sees Few Good Crypto Uses

The central bank in Pakistan does not believe that there are many good use cases for cryptocurrency. However, the country’s financial regulator cited ‘a lot of misuses’ of these virtual currencies all over the globe. It said that some of these misuses included trafficking of people, human rights violations, money laundering and a number of other things. Reza Baqir, the State Bank of Pakistan’s (SBP) governor, made these comments when he was talking about crypto during a panel discussion on Sunday at the 13th Karachi Literature Festival. He asserted that there were not many good use cases of crypto to be found.

The Pakistani central bank governor said that if the value proposition that crypto offers is taken into account right now, the only use cases that have been highlighted so far have been exchanges. The SBP governor went on to highlight the risks that are associated with these cryptocurrencies. He noted that it was not possible for any law enforcement agency, or a regulator to have any idea about who is conducting the crypto transaction and for what purpose. He opined that this was the reason that had resulted in a number of misuses of crypto, which included some of the issues mentioned above.

Baqir also went on to say that Pakistan’s financial system has already been used for the financing of terrorism as well as money laundering. Regardless, the governor of the central bank said that the people in the country still want them to allow bitcoin to be traded, used as well as sent abroad. He elaborated that there are risks and benefits associated with everything new, but he added that it was the job of the policymaker to assess the balance and then make a judgement whether the perks can outweigh the risks when it comes to the use of crypto in Pakistan.

However, last month Baqir had stated that the potential risks associated with cryptocurrencies are far more than the benefits associated with them. Meanwhile, he had a more positive stance towards blockchain or distributed ledger technology that powers cryptocurrencies. He stated that this technology has the potential of solving a number of problems the world is dealing with right now. The government of Pakistan are currently evaluating the pros and cons of regulating crypto in the country. A high-level interministerial committee had been established for making recommendations about whether regulation is required or not.

The committee has stated that it is not in favor of the move. As a matter of fact, it went as far as submitting a report back in January to the Sindh High Court. In the report, the committee recommended that a complete ban be imposed on cryptocurrencies under Pakistani law. However, ShibliFaraz, the minister for science and technology, had said in the same month that the government will ‘regularize’ crypto in Pakistan. In fact, he even said that the Securities and Exchange Commission of Pakistan, the State Bank of Pakistan and the finance ministry were working together in order to come up with a plan.

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