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Crypto Sector Could Suffer in Pakistan as Its Central Bank Looks to Ban Cryptocurrencies: Report

Crypto Sector Could Suffer in Pakistan as Its Central Bank Looks to Ban Cryptocurrencies: Report
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After El Salvador Bitcoin submitted a legal tender in September last year, the crypto culture has seen an expansion in several parts of the world. However, the crypto sector is likely to encounter hurdles in Pakistan. The Central Bank of Pakistan is said to be considering a ban on all cryptocurrencies from operating in the country. According to Chainalysis’s Global Crypto Adoption Index, Pakistan ranks third among the top 10 countries with the largest number of crypto users.

The State Bank of Pakistan (SBP) has submitted a document to the Supreme Court of Sindh, describing cryptocurrencies such as Bitcoin as “illegal” and unusable for commercial purposes, according to a report by Sky.

SBP has also reportedly suggested that fines should be imposed on cryptocurrency exchanges operating in Pakistan.

The application submitted by SBP to the court cited at least 11 countries, including China and Saudi Arabia, that have imposed restrictions on the crypto space.

So far, the court has not announced its final position on the legal status of cryptocurrencies in Pakistan.

This is not the first time SBP has called for a ban on cryptocurrency and other related activities.

In April 2018, the major Pakistani financial institution legislated to ban dealing in cryptocurrencies. That hasn’t stopped crypto enthusiasts from experimenting with the sector regardless.

Recently, the Binance cryptocurrency exchange has been restricted by legal issues in Pakistan. Pakistan’s Federal Investigation Agency (FIA) will investigate user complaints alleging that the crypto exchange made them transfer funds to unfamiliar external wallets. It is estimated that the scam cost people a total of around $100 million (about Rs 740 crore).

Meanwhile, countries like India and Russia, among others, are considering ways to regulate the crypto space.

Since cryptocurrency transactions are decentralized and untraceable in nature, governments around the world fear that they could be used to facilitate illegal activities such as money laundering and terrorist financing. The volatility of the cryptocurrency market is another issue that the authorities should monitor before legalizing this sector.

Excessive electricity consumption associated with cryptocurrency mining has also become a concern in many parts of the world, including Iran and Kazakhstan.

Despite the barriers, the cryptocurrency market soared to $3 trillion (about Rs 2,15,66,720 crore) last year, its highest level.

Are you interested in cryptocurrency? We discuss all things crypto with WazirX CEO Nischal Shetty and WeekendInvesting founder Alok Jain on Orbital, the Gadgets 360 podcast. Orbital is available on Apple Podcasts, Google Podcasts, Spotify, Amazon Music and anywhere you get your podcast.

Cryptocurrency is an unregulated digital currency that is not legal tender and is subject to market risk. The information in the article is not intended to be and does not constitute financial advice, business advice or any other advice or recommendation of any kind provided or approved by NDTV. NDTV will not be liable for any loss arising from any investment based on any recommendation, forecast or any other information contained in the article.

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