Pakistan is now creating a new legal framework for regulating digital assets like Bitcoin. This is a new development in a country that has been hostile with digital assets. It can be recalled that in May 2017, the State Bank of Pakistan stated that it does not recognize all digital currencies. Again, on April 6, 2018, SBP warned the public about the risk of cryptocurrencies. As stated in a press release :
“ [The] General Public is advised that Virtual Currencies/Coins/Tokens (like Bitcoin, Litecoin, Pakcoin, OneCoin, DasCoin, Pay Diamond, etc.) are neither recognized as a Legal Tender nor has SBP authorized or licensed any individual or entity for the issuance, sale, purchase, exchange or investment in any such Virtual Currencies/Coins/Tokens in Pakistan. Further, Banks/ DFIs/ Microfinance Banks and Payment System Operators (PSOs)/ Payment Service Providers (PSPs) have been advised not to facilitate their customers/account holders to transact in Virtual Currencies/ Initial Coin Offerings (ICOs) /Tokens vide BPRD’s Circular No. 03 of 2018.”
On November 6, the Securities and Exchange Commission of Pakistan issued a position paper on the regulation of digital currencies. As stated in the report :
“ Digital assets, also known as Virtual Assets, and Crypto Assets are the start of a new era of Digital Finance, and demand innovative regulatory measures and approaches by the regulators across the world. This could only be possible by the initiation of a new era that re-invents regulatory regime/measures as they are known to the regulators globally today. “
The report is focused only on asset-backed security tokens / digital assets but does not include remarks on a central bank digital currency, or CBDC.
The report favored utility token and security token primarily because of transparency, improved liquidity potential, efficiency gains, and efficient clearing and settlement mechanisms. As further stated in the report the revolutionary impact of security tokens depends mostly on its inherent potential to democratize the financial systems by enabling fractional ownership of assets. This will result in the lowering of barriers to investment and inclusive access to retail investors to previously unaffordable or insufficiently divisive asset classes.
The SECP intends to hold multiple discussion sessions and welcomes any input/comments. It encourages the public to share in a posted discussion on their official website and social media accounts.
Pakistan now joins the league of nations that have created a legal crypto framework to accommodate cryptocurrency in the country. With the growing number of countries that have already adopted crypto, regulations are a must to regulate digital assets and protect the interest of investors. With proper regulations, we could anticipate that cryptocurrencies and the crypto market will continue to flourish.