Pakistan's Central Bank Tells Banks to Cut Ties to Cryptocurrencies

  • The State Bank of Pakistan, the country's central bank, cautioned agaisnt cryptocurrencies
  • Citing fraudulent activity, poor security and business survivability, it asked financial institutions not to facilitate crypto-related business

This month has seen the Reserve Bank of India turn its bank on cryptocurrency-related accounts. In a new development,  the State Bank of Pakistan (SBP), the country’s central bank, advised Pakistani citizens not to transact in cryptocurrencies, while telling banks and financial intitutions not to facilitate crypto-related business.

 

Cryptocurrency In Pakistan

In a statement published on the central bank’s website, it states cryptocurrencies are not recognized as legal tender.

"[Cryptocurrency is] neither recognized as a Legal Tender nor has SBP authorized or licensed any individual or entity for the issuance, sale, purchase, exchange or investment in any such Virtual Currencies/Coins/Tokens."

SBP

In addition, the statement goes on to ask any bank, payment service provider, or facilitator to no longer facilitate customers the sale or purchase of cryptocurrencies.

The financial institution then outlined some of the factors that led to its move:

  1. High price volatility in virtual currencies, which places investors’ money at an inordinate degree of risk relative to the market
  2. Failures and closures of cryptocurrency exchanges for any reason, such as outstanding legal action.
  3. Security compromises on cryptocurrency exchanges, cryptocurrencies, businesses and Initial Coin Offerings (ICOs).

The central bank’s statement urges Pakistani citizens to steer clear of any activity in the cryptocurrency realm. So as "to avoid any potential financial loss and legal implications."

According to a local news outlet ProPk, this could equate to legal proceedings against anyone attempting to transfer money outside of the country using cryptocurrencies.

Following India’s footsteps

In a recent interview with The Economic Times, billionaire entrepreneur Tim Draper made plain his opinion on India's approach to cryptocurrencies, referring to India's policy as 'the stupidest thing'.

"If I had a meeting with Modi  [India’s prime minister], I would have let him know he is making a huge mistake. [Bitcoin] should be the national currency."

Tim Draper

Draper then stated that bitcoin could be an internationally accepted currency within 2-3 years. Pakistan is seemingly following India’s footsteps when it comes to cryptocurrencies, a move some frown upon.