Pakistan says risks from cryptocurrencies outweigh its benefits

Pakistan’s central bank has said that the risks of cryptocurrencies far outweigh their purported benefits. It had earlier warned the investors to stay away from cryptocurrencies.

Reza Baqir, governor of the State Bank of Pakistan, said that new and emerging markets are perfect and fertile ground for unregulated currencies being used for transactions instead of the nation’s legal currency.

However, the speculative nature of cryptocurrency is a threat to the well-established and regulated economic regimen. Moreover, cryptocurrency’s acute price fluctuation and decentralized nature pose a risk to financial and monetary stability for a developing country.

Cryptocurrency is more popular in unstable nations where the fiat or native currency has little value. Rising inflation and loss of value of local currencies make cryptocurrencies an ideal replacement.

Pakistan which is in a state of economic turmoil and its Rupee is depreciating at an alarming rate the cryptocurrency could become an attractive alternative for Pakistani investors.

However, it will thrive at the cost of the local currency and this is exactly what the governor of the State Bank of Pakistan wants to stop.

Pakistan Telecommunication Authority (PTA) has decided not to immediately block the cryptocurrency websites in the country and has sought official remarks from the Ministry of Information Technology and Telecommunication on the matter.