File photo of State Minister for Finance Aisha Ghaus Pasha
Pakistan will never legalize cryptocurrency, State Minister for Finance Aisha Ghaus Pasha said on Wednesday, claiming this decision is linked to requirements of the Financial Action Task Force (FATF).
In a briefing to the Senate Standing Committee on Finance, she said the State Bank of Pakistan (SBP) and the I.T. Ministry had both started working to implement an internet ban on cryptocurrencies and related services. Justifying the government’s decision to ban digital currencies, Pasha claimed it was influenced by the Paris-based FATF, which had imposed conditions on Pakistan to counter money-laundering and terrorist financing. One of the conditions, she claimed, was a prohibition on cryptocurrencies.
During the meeting, Senator Saleem Mandviwalla noted that several Pakistanis had made significant investments—to the tune of billions of dollars—in cryptocurrencies. However, the committee was informed that the global crypto market cap had shrunk from $2.8 trillion to $1.2 trillion, with SBP officials claiming it was a “total fraud.”
In their briefing, SBP officials said there were over 16,000 types of cryptocurrencies available online and were a very “high-risk” investment. They also informed the committee that the Federal Investigation Agency (FIA) and the Federal Board of Revenue’s Financial Monitoring Unit were both surveilling Pakistani investments in cryptocurrencies regularly, adding that an investigation was currently underway with the potential for an eventual crackdown.
Earlier, the SBP had claimed it was conducting internal studies on cryptocurrencies as part of future monetary strategies. However, despite several countries now adopting digital assets as legal tender, the Senate’s decision suggests Pakistan is unwilling to take the risk of FATF sanctions to legalize digital currencies. According to the FATF, it seeks proper regulation of all digital assets to avoid their use by criminals and terrorists. It has also sought the implementation of a controversial “travel rule,” which requires services providers to collect and share information of crypto transactions.