State Bank of Pakistan

Pakistan Seeks to Block Websites Dealing in Cryptocurrency: Report

16/01/2022 by Idelto Editor

Pakistan’s Federal Investigation Agency (FIA) is reportedly seeking to block websites dealing in cryptocurrency. The decision followed a meeting the agency had with the State Bank of Pakistan (SBP) which recently recommended a complete ban on crypto.

Pakistan’s FIA Reportedly Seeks to Block Cryptocurrency Websites

Pakistan’s Federal Investigation Agency (FIA) is seeking to block websites dealing in cryptocurrency, Dawn newspaper reported Sunday. The FIA is “a border control, criminal investigation, counter-intelligence, and security agency under the control of the Interior Secretary of Pakistan,” according to the Pakistani government website.

FIA Director-General Dr. Sanaullah Abbasi told the press Saturday that his agency will approach the Pakistan Telecommunication Authority (PTA) to block crypto websites to prevent fraud and money laundering.

His statement followed a meeting he had with senior officials of the State Bank of Pakistan (SBP), the country’s central bank. The FIA chief said:

The SBP officials gave a presentation in the meeting about a regulating mechanism.

During the meeting, the SBP officials noted that the central bank recently submitted recommendations under the direction of the Sindh High Court on the legal framework for cryptocurrencies in Pakistan. The State Bank has recommended a complete ban on cryptocurrency.

Emphasizing that his department is mainly concerned about fraud and money laundering, the FIA director-general opined:

Crypto has given a new dimension to fraud.

The FIA chief proceeded to discuss existing Pakistani laws: the Prevention of Electronic Crimes Act 2016; the Foreign Exchange Remittance Act 1947 (FERA); and the Anti-Money Laundering Act 2010 (AMLA). He stressed that they do not contain provisions for the illegal and misuse of cryptocurrencies.

In addition, the meeting with the SBP officials highlighted that Pakistan has “no regulatory framework for virtual asset service providers (VASPs) in order to comply with the FATF [Financial Action Task Force] requirements,” the publication conveyed.

Abbasi added that the FIA recently initiated a probe into a massive financial scam after 11 apps linked to cryptocurrency exchange Binance stopped working. The scheme allegedly defrauded Pakistani investors of over $100 million.

What do you think about the Pakistani FIA seeking to block cryptocurrency websites? Let us know in the comments section below.

Pakistan’s Central Bank Decides to Completely Ban Cryptocurrency: Report

14/01/2022 by Idelto Editor

The State Bank of Pakistan (SBP), the country’s central bank, has reportedly come to a decision to ban the use of all cryptocurrencies within the country. The central bank has also asked the Sindh High Court to ban “unauthorized operations” of crypto exchanges and impose penalties on them.

Pakistani Interministerial Committee Recommends Banning Cryptocurrency and All Related Activities

A high-level interministerial committee constituted to make recommendations on whether any form of cryptocurrency should be permitted under Pakistani law reportedly submitted its report to the Sindh High Court Wednesday.

The committee was constituted by the Sindh High Court under the supervision of the deputy governor of the State Bank of Pakistan (SBP) and officials from the Pakistani Ministry of Finance, Ministry of Information Technology, Telecommunication Authority, and the Securities and Exchange Commission.

The 38-page report, submitted to the court by SBP Deputy Governor Sima Kamil, recommends a complete ban on all cryptocurrencies and related activities in Pakistan.

The committee stated that cryptocurrency should be declared illegal, emphasizing that after careful analysis, it found that the risks of cryptocurrency far outweigh its benefits for Pakistan. The report also warns that cryptocurrency could be used for money laundering and terrorism financing.

Furthermore, the committee urged the court to ban “unauthorized operations” of crypto exchanges and impose penalties on them as some countries have done. The report cites recent investigations by Pakistan’s Federal Investigation Agency (FIA) of crypto exchanges, including Binance, and the risks they pose to investors.

The Sindh High Court directed the committee to send a copy of the report to the Ministry of Finance and the Ministry of Law to make the final decision on whether any form of cryptocurrency will be allowed in Pakistan. The court also directed the two ministries to jointly recommend whether crypto business of any form can be legally carried out in the country. They are to submit a report of their decision on April 11.

Petitioner Waqar Zaka, a television host and crypto entrepreneur, has argued that cryptocurrency should be declared legal. The court will resume hearing his petition on April 12.

Do you think Pakistan will soon ban cryptocurrency? Let us know in the comments section below.

Pakistanis Find Ways to Trade Bitcoin Rendering Ban Ineffective

14/05/2018 by Idelto Editor

The crypto ban in Pakistan is proving to be not as effective as expected. If anything, the State Bank has barred commercial banks and financial firms from dealing in cryptocurrency which, of course, makes life harder for local exchanges. Individual traders, however, are finding alternative ways to acquire or sell cryptocurrencies, defying the warnings and the prohibitions.

Also read: India’s Supreme Court Keeps Ban on Banks’ Crypto Services, For Now

Central Bank Can’t Ban Cryptocurrency in Pakistan

Pakistan’s experience with cryptocurrencies offers another example of how ineffective financial authorities can be when trying to fill a legal vacuum with prohibitive administrative measures. Central banks often forget they are neither parliaments, nor governments, and their regulatory overreach cannot legitimately substitute the normal legal process. The recent decision of the State Bank of Pakistan to ban crypto-related activities proves that observation.

In early April, the SBP issued a circular on the “prohibition of dealing in virtual currencies”, right after a similar measure by the Reserve Bank of India, the regional rival. Unlike their Indian colleagues, who gave banks and traders three months to comply, Pakistani central bankers imposed the ban with immediate effect. SBP said virtual currencies and tokens were not legal tender and reminded it had not authorized any individual or entity to issue, sell, purchase, or exchange any such coins in Pakistan. All banks, microfinance entities, payment system operators and service providers were “advised to refrain” from dealing in cryptocurrencies.

The local market is by no means comparable to India’s booming crypto sector. According to Danyal Manzar, CEO of Pakistan’s first bitcoin exchange Urdubit, about 100 different digital coins were being traded daily across all mediums before the ban. His trading platform decided to close down permanently following the prohibition. “The decision was made in haste. Ample time should always be provided for a proper shutdown. But we respect the SBP’s decision,” he told The Express Tribune.

Immediately after the ban, Urdubit warned its clients to withdraw both their fiat and their crypto funds. A month later, however, some of its users still have bitcoins in their accounts on the platform. Manzar believes that those who want to trade will continue to do so because “alternative ways still exist that will continue to be tapped no matter how risky they are.” He thinks that cryptocurrencies would only disrupt the stock market, and not the entire monetary system. “About 80 to 85% of the traders from stock exchanges came to try their luck in virtual currency,” he said.

Localbitcoins PKR Trade Spikes After Ban

Recently, Pakistani crypto traders told Asia Times that the central bank’s move initially caused a dip in the crypto market but the volume of trading has gradually picked up after alternative trading methods were discovered. “Traders realized that the SBP hasn’t, and can’t ban cryptocurrency in Pakistan,” Lahore-based trader Majid Ali commented. “What the State Bank has done is ban banks from entertaining crypto, so if you’re not dealing via banks, you [still] can own and trade virtual currency in Pakistan, which comes under the IT ministry,” he explained.

Indeed, as the chart of the weekly Localbitcoins volume from Coin Dance shows, trading has spiked after the release of the circular. It peaked in the week of April 28 to more than 163 million Pakistani Rupee (>1.4 million USD), almost reaching December-January all-time highs.

The price of Pakistan’s first and only cryptocurrency, Pakcoin, which was explicitly mentioned in the SBP’s prohibition, has also jumped – by over 60% since the ban. Pakcoin founder Abu Shaheer says that the central bank’s measure has actually worked in favor of his crypto by “serving to expose Pakcoin’s name [and] more people got interested in it.” The digital token is already used for mobile phone credit top-ups.

Islamabad to Prohibit “All Forms of Virtual Currency” After All

Sources from Pakistan’s Ministry of Information Technology and Telecommunication have told Asia Times that the government in Islamabad does plan to formally declare cryptocurrencies illegal in the country. “We have forwarded our recommendation for a ban on all forms of virtual currency trading, and proper legislation is being worked on,” a government official said.

According to crypto trader Majid Ali, however, while the legislation is likely to hit trading, there are alternatives for dealing with cryptocurrencies. “The government of Pakistan can’t stop the trade in an international commodity that is accepted in other countries,” he said. Majid also warned that the ban actually opens transfer channels that can be used for illegal purposes.

Do you think that bans imposed by central banks can really stop cryptocurrency trade? Tell us in the comments section below.

Images courtesy of Shutterstock, Coin Dance.

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Pakistan’s Urdubit Exchange Shuts Down After Crypto Ban

12/04/2018 by Idelto Editor

Urdubit, a leading Pakistani bitcoin exchange, has closed down permanently. The news came after the central bank of Pakistan announced a ban on dealings with cryptocurrencies. The trading platform urged customers to withdraw their funds “as fast as possible”. Its team confirmed on social media its operations had been suspended due to the prohibition of crypto transactions. Other exchanges have followed suit.

Also read: Pakistan’s Central Bank Prohibits Crypto Dealings with a Circular

Urdubit Cancels All Bitcoin Orders

Pakistan’s “first bitcoin exchange” announced its decision to shut down after the State Bank of Pakistan barred all financial institutions from processing crypto-related transactions. Urdubit warned its clients to withdraw both their fiat and crypto funds immediately. Through its accounts on Facebook and Twitter, and on its website, the platform said it was terminating services due to the central bank’s ban.

On April 6, SBP issued a circular on the “prohibition of dealing in virtual currencies”, effectively banning crypto transactions in Pakistan. The move came after a similar ban introduced by the central bank in neighboring India. SBP advised commercial banks and payment providers to refrain from using, trading, holding, and transferring digital coins. The document, signed by the State Bank’s director Muhammad Javed, stated that banks and businesses should not facilitate crypto transactions of their customers and account holders.

According to Pakistani media, the Karachi-based Urdubit is the country’s first bitcoin exchange. Launched in 2014, the platform gained popularity along with the world’s leading cryptocurrency. On Saturday its team said in a Facebook post:

Due to the current stance on virtual currencies by the SBP, we are closing Urdubit. Withdraw your funds as soon as possible! Please, buy BTC instantly, as we are canceling orders on, or withdraw your PKR [Pakistani Rupee] immediately.

Its website tells visitors: “Urdubit is shutting down! Withdraw your funds to your bank account or wallet!” The closure was confirmed via Twitter with a message published on Sunday: “Urdubit is closed. All bitcoin withdrawals will be closed today at midnight. Please, withdraw your funds.” The platform’s trading volume increased over the weekend following its decision to close down. According to Bitcoincharts, it traded 26 BTC on April 6 and 6 BTC on the next day.

The Future of Crypto Trade in Pakistan Is Unclear

The prohibition was imposed without an official government mandate and despite the lack of dedicated legislation on cryptocurrencies. Nevertheless, SBP asked Pakistani banks to “immediately” report any crypto transactions to the Financial Monitoring Unit (FMU). Furthermore, the central bank warned citizens against using cryptocurrencies to transfer money abroad. SBP also made it clear that virtual currencies like bitcoin are not considered legal tender in the country.

It remains unclear how many of Urdubit’s customers have managed to get their funds back. Small amounts of bitcoin have been traded after the closure on April 8. One of the warnings states that the exchange should not be held liable if clients failed to withdraw their money. There is no indication as to whether Urdubit intends to reopen again, in case the regulatory situation improves.

According to a company working with Urdubit, the exchange is trying to reimburse its customers. “Governments and banks are going to fight bitcoin because investing in it means a bank run on the central bank,” co-founder of Blinktrade Rodrigo Souza told the local online edition Propakistani. His company has been maintaining the open-source software used by Urdubit.

Other Pakistani exchanges have also decided to stay away from trouble with the SBP. A message on BTCPK’s website states that the price quotes are for informative purpose only. “BTCPK follows prohibition rules as set by the State Bank of Pakistan via Circular No. 03 of 2018,” the trading platform tells its customers. The exchange claims to be “the largest crypto market in Pakistan.”

Authorities in Islamabad have already demonstrated negative attitude towards cryptocurrencies in the past. Crypto traders have been targeted recently by the Federal Investigation Agency of Pakistan. SBP’s ban, however, is the largest clampdown on local cryptocurrency exchanges so far.

Do you think Pakistani exchanges will find alternative ways to provide services to the crypto community in the country? Share your thoughts on the ban in the comments section below.

Images courtesy of Shutterstock.

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Pakistan’s Central Bank Prohibits Crypto Dealings with a Circular

09/04/2018 by Idelto Editor

The State Bank of Pakistan (SBP) has issued a circular on the “prohibition of dealing in virtual currencies”. The measure comes right after a similar move by the central bank of neighboring India. Commercial banks and payment providers have been told to stay away from crypto operations. They should not facilitate transactions of virtual currencies and tokens, the document states.

Also read: India Orders Banks to Drop Cryptos, Studies Issuing its Own Digital Coin

Bitcoin, Pakcoin, Onecoin… Deemed Illegal

Pakistan’s central bank says virtual currencies like Bitcoin, Litecoin, Pakcoin, Onecoin, Dascoin, Pay Diamond, and tokens from initial coin offerings are not legal tender in the country. These are not guaranteed by the Government of Pakistan, the financial institution notes. SBP has not authorized any individual or entity to issue, sell, purchase, or exchange any such virtual currencies and coins in Pakistan, according to circular No. 03 published on the bank’s website.

No dedicated legislation regarding cryptocurrencies has been adopted in the country yet. Authorities, however, have demonstrated negative attitude towards bitcoin on many occasions. The Federal Investigation Agency, which has conducted several operations against cryptocurrency traders, recently called on the government in Islamabad to declare digital currencies “persona non grata”.

In accordance with the promulgated stance, all banks, microfinance entities, payment system operators and service providers are “advised to refrain” from dealing in cryptocurrencies. That includes the “processing, using, trading, holding, transferring, and investing” in digital coins. SBP also says that banks and companies should not facilitate crypto transactions of their customers and account holders.

Pakistani banks have been asked to “immediately” report any such transaction to the Financial Monitoring Unit (FMU). All crypto transactions have been called “suspicious”. The circular letter is signed by the State Bank’s director Muhammad Akhtar Javed, who asks the banks to acknowledge receipt.

According to Pakistani media, SBP has also warned citizens against using cryptocurrencies to transfer money abroad. Any person doing that will be subject to prosecution. Domestic and international transfer services are regulated by the central bank in Pakistan. It notes that no entity is authorized to offer cryptocurrency remittance services. Pakistanis have been advised not to engage in activities like mining, trading, and promoting virtual currencies.

In the Footsteps of India

The prohibition of crypto-related transactions has been reported as a “major development” by the local press. It follows a similar decision by the Reserve Bank of India. RBU ordered regulated financial institutions in the country to terminate all services to individuals and businesses dealing with cryptocurrencies like bitcoin.

The statement issued by India’s central bank effectively prohibits banks from working with intermediaries such as cryptocurrency exchanges. Major commercial banks, however, had been tightening the clamp even before the order. Citibank, ICICI Bank, HDFC Bank, Kotak Mahindra Bank, and the State Bank of India, have all suspended accounts of crypto traders without a mandate from the central bank. As a result, bitcoin trading on local exchanges has dropped as much as 90% in the last two months, as news.Bitcoin.com reported.

According to Indian media, RBI’s tough stance, amid continuing regulatory uncertainty, is forcing Indian exchanges to look for jurisdictions with clearer policies, like Australia. Trading platforms are also trying to actively respond to the latest challenge. An online petition calls for the reversal of the bank’s decision. A campaign on Twitter has been gathering support under the hashtag #RBICantStopMe.

Much like India, Pakistan has seen an increased interest in cryptocurrencies since last year when the market capitalization of bitcoin and the like reached all-time highs. However, the local crypto sector is not as developed as in other countries, including India.

Do you think the measures imposed by the central banks of Pakistan and India will curtail crypto activities? Share your expectations in the comments section below.

Images courtesy of Shutterstock.

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