For more than two years, since April 04, 2018 to be precise, the State Bank of Pakistan has kept in place a ban on Bitcoin and other virtual currencies in Pakistan. They’ve entailed that the Bank will neither get involved if there is any dispute concerning the usage of these currencies, nor will they facilitate any transaction for them. Now, Pakistan’s High Court seems to have come to Bitcoin’s rescue.
“If digital currency isn’t an unlawful act, why is it not allowed?“
On Sep 30, 2020, Justice Muhammad Iqbal Kalhoro, who was not pleased with the SBP’s ban on cryptocurrencies, said that Pakistan is still far behind in modern technology in comparison to the rest of the world. On further seeking answers regarding the ban, Justice Kalhoro asked “If using digital currency doesn’t constitute an unlawful act, why is it not being allowed?”.
The court has thus requested the federal government, the SBP, and the FIA to submit their respective responses with regard to the petition on November 5. Just like India’s RBI ban had been lifted, crypto currency traders could hope for the same result in their case as well.
Pakistan, which was seeking to reduce perceived levels of crime like money laundering and terrorist financing, had also introduced a licensing scheme for electronic money institutions. The highest judicial institution of the Pakistani province of Sindh had placed a request to the Federal Investigation Agency (FIA) and federal government along with State Bank of Pakistan (SBP) to submit a detailed reply concerning their decision regarding the ban on cryptocurrency dealing in the country, as reported by a local media.
The Pakistan Bitcoin Ban Saga
The SBP declared all forms of digital currencies illegal. They also noted that cryptocurrencies like Bitcoin, Litecoin, Onecoin, etc. are not issued or guaranteed by the government, nor are they legal.
It was also warned by the apex bank that all institutions should report every crypto-related transaction as suspicious. Nonetheless, despite the ban, crypto traders kept using alternative methods such as P2P or peer-to-peer on trading platforms like Localbitcoins to boycott banks, thus rendering the ban less effective.
When the FATF had noted earlier, that Pakistan had made very little progress while coming up with an action plan in order to combat the phenomena in general, Reuters quoted in a statement, saying that “Given the limited progress on action plan items the FATF urges Pakistan to swiftly complete its action plan, particularly those with timelines of May 2019”.