Pakistan’s government has reaffirmed its stance against legalizing cryptocurrency transactions. This was stated by the Minister of State for Finance and Revenue, Aisha Ghaus Pasha. Pasha stated that cryptocurrencies would “never be legalized” in Pakistan, citing concerns about potential financial terrorism and the country’s recent exit from the Financial Action Task Force (FATF) grey list.
In the Minister’s words:
“Cryptocurrency 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.”
As a result, the State Bank of Pakistan and the Information Technology Ministry have been instructed to begin work on banning cryptocurrencies, and bank customers have been warned against engaging in cryptocurrency trading.
Effect of The Cryptocurrency on The Political Instability
The government’s refusal to embrace cryptocurrencies contradicts the growing interest in digital assets among the Pakistani population. Despite economic and political challenges, the demand for cryptocurrencies in the country continues to rise, with annual trading volume for Pakistan-based wallets reaching approximately $25 billion. Additionally, limited access to US dollars, due to import restrictions, has led many retail users to convert their salaries into stablecoins as a hedge against further economic instability.
The Impact of the FATF
The Financial Action Task Force (FATF), an intergovernmental organization focused on combating money laundering and terrorist financing, plays a significant role in Pakistan’s stance on cryptocurrencies. Previously, Pakistan was placed on the FATF grey list in 2018 due to global money laundering concerns. However, in October of the previous year, Pakistan was removed from the increased monitoring list after addressing the technical deficiencies outlined in its action plans. The FATF’s influence on Pakistan’s financial services sector and potential economic sanctions underscores the importance of compliance with its regulations.
