Despite Economic Fragility, Pakistan Seeks to Ban Crypto Use

On Wednesday, May 17, Pakistan’s Senate Standing Committee on Finance directed legislation to curb the use of cryptocurrencies in the country. This comes at a time when the country has been facing major economic challenges with inflation soaring to more than 36% during the last month of April 2023.

During yesterday’s meeting, Minister of State for Finance Ayesha Ghos Pasha said that the legislation will be implemented banning any kind of use of cryptocurrencies. During the meeting, the Senate Banking Committee received orders from the Ministry of Information Technology and the State Bank, who have already started working on banning cryptocurrencies in Pakistan.

Dr. Ayesha Ghos Pasha noted that Pakistan would never legalize cryptocurrencies. In their defense, Sohail Jabbar, the executive director of Digital State Bank stressed that the crypto market has already shrunk from $2.8 trillion to now at $1.2 trillion.

Addressing the Committee he further stated that cryptocurrency is a “total fraud” and would be never allowed in Pakistan. The country seems to be following in the footsteps of China in putting an absolute ban on the use of crypto.

Pakistan: Crypto Is A High-Risk Asset

Pakistan’s financial policymakers believe that crypto is a high-risk asset and that no one benefits from it. Also, considering its current financial position, Pakistan is not willing to ruffle feathers with global agencies at this point. Dr. Ayesha Ghos Pasha highlighted that the FATF has already imposed conditions in this regard. As reported by the local publication Independent Urdu, Dr. Ayesha said:

“Crypto-currency will not be allowed. We cannot deal in cryptocurrency. Now that we have come out of FATF, this is an area we should avoid. Crypto can also lead to financial terrorism, already we are not getting an IMF deal, they need some excuses against us”.

Over the last decade, cryptocurrencies have proved to be a strong bet against inflation. When the country’s economic condition is already fragile, is banning crypto assets the right move for Pakistan?