According to coindesk.com, Pakistan made this decision in order to stay on the good side of the Financial Action Task Force which is the global money laundering and terrorist financing watchdog. The same source revealed that banning cryptocurrencies in the country would prevent it from going on the FATF’s ‘Grey List.’ This list includes countries the body considers deficient in Anti-Money Laundering and Counter-Terrorist Financing measures but that are working with it to address their shortcomings.
Pakistan’s Minister of State for Finance and Revenue Aisha Ghaus Pasha revealed that the State Bank of Pakistan (SBP) and the Information Technology Ministry have been ordered to initiate a ban on cryptocurrencies. The SBP first revealed its plans to ban crypto in January 2022 thus clarifying its position on the financial technology.
Coindesk’s sources reveal that several banks in Pakistan have already started informing their clients that cryptocurrency trading is illegal. The crypto ban comes in the context of political instability in the country, while the rupee dropped 3.3% to an all-time low against the dollar of 300 per greenback last week according to Bloomberg.
According to a report by Triple-A, over 9 million people, which represents 4.1% of Pakistan’s total population, own cryptocurrency. In 2022, interest in Bitcoin has increased in Pakistan as suggested by a boost in online searches related to bitcoin and cryptocurrency following the government’s discussions for cryptocurrency regulation.
Cointelegraph reports that Crypto adoption in the country has been relatively high, as Pakistani citizens were reportedly holding USD 20 billion worth of crypto in 2021. Pakistan is planning to launch a central bank digital currency in 2025 and has recently adopted a national blockchain Know Your Customer platform.
In March 2023, the Pakistan Banks’ Association has signed a contract for the implementation of a blockchain-based Know Your Customer (KYC) platform. The platform will be developed by the Avanza Group, which specialises in customer experience management solutions, blockchain applications, advanced banking applications, and artificial intelligence.
This new endeavour to create the electronic KYC system is part of the State Bank of Pakistan’s plans to improve the country’s anti-money laundering (AML) and counter-terrorist financing (CTF) control infrastructure.
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