Pakistan Can No Longer be Policy Neutral on Cryptocurrency Regulations

The world is seeing an unparalleled explosion in cryptocurrencies (or cryptos). Cryptos have emerged as a new asset class where hedge funds and investment firms globally are launching new vehicles devoted to these digital assets. Needless to mention that individuals everywhere, on their own, are hooked and long on cryptos, using their hand-held devices. Cryptocurrency Regulations were born with an aspiration to democratize finance and it appears the time has come when it’s about to.

Pakistan Can No Longer be Policy Neutral on Cryptocurrency Regulations

Cryptos offer multiple advantages over fiat currencies such as a decentralized structure with no central authority or governing body, no printing involved, enhanced security, privacy and anonymity, ease of use and accessibility, fast transaction speed, reduced or no KYC (know-your-customer), low transaction costs, etc. This uptrend brings with it emerging opportunities and potential pitfalls. While interest in crypto has exploded, the most significant challenge governments and policymakers around the world face today is how to regulate this asset class.

Governments and regulators within are taking varied positions on the subject. While El Salvador has become the first country to declare Bitcoin as legal tender, crypto markets expect Paraguay and Venezuela to follow suit. Russia, post imposition of sanctions by the west due to its recent invasion of Ukraine, is reported to be considering accepting cryptocurrency as payment for its oil and gas exports. Ukraine, on the other hand has also turned to cryptocurrencies to fund its military fight against Russia, which is attracting donors who are looking to support the cause

Abu Dhabi Global Market has recently licensed Kraken, one of the world’s largest and oldest Cryptocurrency Regulations exchanges, to operate a regulated virtual asset exchange platform, a Virtual Asset Multilateral Trading Facility (MTF) and Custodian in Abu Dhabi and the wider UAE. This will give the local investors the ability to invest, trade, withdraw and deposit virtual assets directly in local currency. Dubai also, is attracting crypto firms as it issued its first law governing digital assets and constituted a regulatory body, the Virtual Asset Regulatory Authority (VARA), to oversee the sector

At the other end of the spectrum, the State Bank of Pakistan has, through a circular in 2018, refrained all banks, DFIs, payment system operators and payment service providers from processing, using, trading, holding, transferring value, promoting, and investing in virtual currencies and tokens. The restriction applies to facilitating customers in this respect also and warnings have been issued cautioning the general public not to indulge in crypto-related activities.

Securities and Exchange Commission of Pakistan, following the footsteps of the central bank, through a notification in 2020, extended the aforementioned restrictions for all the companies and limited liability partnerships in Pakistan. Despite this, crypto business is thriving in Pakistan. Such is the nature of Decentralized Finance (DeFi). Apps like Binance, which track and trade cryptocurrencies, are reported to have more downloads than some of the country’s largest banks’ apps.

Source: This news is originally published by propakistani