Pakistan Announces Ban on Crypto Sector Amid Economic Woes

• The government seems to be following China’s lead by outlawing cryptocurrency entirely.
• Financial officials in Pakistan see cryptocurrencies as high-risk investments that benefit nobody.

On Wednesday, May 17, the Senate Standing Committee on Finance in Pakistan ordered new cryptocurrency regulation laws to be drafted. Inflation hit an all-time high of almost 36% in the month of April 2023, adding to the country’s other economic woes.

Minister of State for Finance Ayesha Ghos Pasha said yesterday that the law against the usage of cryptocurrency would be enforced. The Senate Banking Committee was briefed by the Ministry of Information Technology and the State Bank, both of which have begun working on a ban on cryptocurrencies in Pakistan, during the meeting.

No Mood to Upset International Organizations

Dr. Ayesha Ghos Pasha made the observation that cryptocurrency will never be legitimized in Pakistan. Sohail Jabbar, the head of Digital State Bank, defended the institution by saying that the cryptocurrency market cap has dropped from $2.8 trillion to $1.2 trillion.

In his address to the Committee, he also said that virtual currencies are a “total fraud” and that they will never be legalized in Pakistan. The government seems to be following China’s lead by outlawing cryptocurrency entirely.

Financial officials in Pakistan see cryptocurrencies as high-risk investments that benefit nobody. Pakistan is also in no mood to upset any international organizations right now because of its precarious financial situation. The FATF has already placed constraints in this area, as Dr. Ayesha Ghos Pasha pointed out.

Cryptocurrencies have been a reliable hedge against inflation over the last decade. There is a huge question about the timing chosen by Pakistan to prohibit digital assets, given the state of the economy.