A committee mandated by the Sindh High Court (SHC) on Wednesday submitted its report recommending a “complete ban” on cryptocurrency and related activities in Pakistan.
The report noted that after carefully weighing the risks and benefits of cryptocurrency, it was found that the risks of cryptocurrency outweigh its benefits in the country.
“The only use of cryptocurrency in Pakistan seems to be speculative in nature where people are being enticed to invest in such coin for the purpose of short-term capital gains,” the report said. “This may result in the flight of precious foreign exchange as well as the transfer of illicit funds from the country. In view of this, the committee would like to make the above recommendation to the secretary ministry of finance”, it added.
Sindh High Court, last year, directed the government to form a high-level committee to assess the legal status of cryptocurrencies in the country after the State Bank of Pakistan on April 6, 2018, advised banks and payment system operators to “refrain from processing, using, trading, holding, transferring value, promoting and investing in virtual currencies/tokens.”
A two-judge bench led by Justice Mohammad Karim Khan Agha ordered the review committee to submit its report with the Finance Ministry and Law Ministry for consideration. The ministries will review the report at a joint meeting and take a final decision on whether cryptocurrency would be legal in Pakistan or not.
The court also sought recommendations from both ministries on the legal status of cryptocurrency business in any form in the country. The orders come as people engaged with cryptocurrency business are facing difficulties due to raids and the freezing of bank accounts of users and dealers allegedly by the Federal Investigation Agency (FIA).
Further, the court order the finance and law ministries to file their joint recommendations until April 11 and directed some senior officials of both ministries well conversant with cryptocurrency to appear in court in person at the next hearing.
The committee’s recommendations come amid a $100 million scandal in Pakistan in which Binance, a cryptocurrency exchange which is the largest exchange in the world in terms of daily trading volume of cryptocurrencies, is believed to have swindled thousands of clients.