Pakistan is making moves toward legalizing cryptocurrency in a big policy shift. The government seeks to amend the State Bank of Pakistan (SBP) Act. According to The Express Tribune, these amendments shall empower the SBP to issue digital currency, regulate the country’s financial assets in physical and digital forms, and exercise custody over them. The move is part of Pakistan’s growing realization that digital currencies should be integrated into the national financial system.
Pakistan Grants SBP Authority to Issue Digital Currency, Paving Way for Crypto Regulation
The proposed amendments also include the power for the SBP to conduct central bank digital currency (CBDC) transactions and, conceivably, have such a digital currency become a legal tender in Pakistan. Furthermore, the SBP will open a subsidiary for the development and management of digital payment systems to promote the development of the nation’s financial infrastructure in the digital realm.
However, the SBP has generally been cautious about cryptocurrency. It has viewed Bitcoin as an illegitimate tender and the volatility and risks of such currencies as reasons to admonish citizens. Specifically, the central bank has emphasized the lack of protection that applicants who lose out of the crypto market instability will not have.
Under the new proposal, digital currency issuers would be hit with authoritarian penalties, double the value of illegally created currency, and penalties would come with stiff fines. The measures indicate that the government will still control the digital financial assets and simultaneously offer a legal breathing space for crypto businesses.
A timeline for federal cabinet approval has yet to be announced, but the proposed amendments are critical for Pakistan’s financial sector. By giving the SBP broader control over digital financial management and strengthening governance, Pakistan seems to be laying the foundation for a regulatory framework for digital currencies.
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