Cryptocurrency is a digital or virtual currency that uses cryptography for security purposes. Cryptocurrency has gained immense popularity globally and has become a hot topic of discussion in Pakistan as well. Pakistan, being a developing country, is slowly but surely catching up with the global trend of adopting cryptocurrency. In this article, we will explore the current status of cryptocurrency in Pakistan, its potential benefits and drawbacks, and the regulatory framework around it.
Current Status of Cryptocurrency in Pakistan
The Pakistani government has not yet officially recognized or regulated cryptocurrency, which means that it is not currently legal tender in the country. However, there is no law in Pakistan that explicitly prohibits the buying, selling, or trading of cryptocurrencies. As a result, the use of cryptocurrency has been growing in Pakistan over the past few years.
One of the reasons for the growth in cryptocurrency usage is due to the lack of access to traditional banking services. Pakistan has a large unbanked population, and many people find it difficult to open bank accounts or access other financial services. Cryptocurrency provides an alternative to traditional banking services and can be used to transfer funds and make payments without the need for a bank account.
Another reason for the growth in cryptocurrency usage is due to the potential for high returns. Cryptocurrency prices are highly volatile, and prices can rise or fall rapidly. Many people see this volatility as an opportunity to make quick profits by buying and selling cryptocurrencies.
Potential Benefits and Drawbacks of Cryptocurrency in Pakistan
There are several potential benefits and drawbacks of cryptocurrency in Pakistan. Let’s start with the benefits:
- Financial Inclusion: Cryptocurrency can provide financial inclusion to the unbanked population in Pakistan. As mentioned earlier, many people in Pakistan do not have access to traditional banking services, and cryptocurrency can provide an alternative.
- Cross-Border Payments: Cryptocurrency can make cross-border payments faster and cheaper. Traditional cross-border payments can take several days and involve high fees. Cryptocurrency transactions can be completed in minutes and involve lower fees.
- Investment Opportunities: Cryptocurrency provides investment opportunities for individuals who do not have access to traditional investment options. Visit for best forex brokers.
Now, let’s explore the drawbacks:
- Lack of Regulation: The lack of regulation around cryptocurrency in Pakistan makes it a risky investment. There is no protection for investors in case of fraud or theft.
- Volatility: The highly volatile nature of cryptocurrency makes it a risky investment. Prices can rise or fall rapidly, and investors can lose their entire investment in a matter of days.
- Lack of Awareness: Many people in Pakistan are not aware of the risks and benefits of cryptocurrency. This lack of awareness can lead to individuals investing in cryptocurrency without fully understanding the risks involved.
Regulatory Framework Around Cryptocurrency in Pakistan
The regulatory framework around cryptocurrency in Pakistan is still in its infancy. The State Bank of Pakistan (SBP) has not yet issued any regulations or guidelines on cryptocurrency. However, the SBP has issued warnings to financial institutions and the general public about the risks of investing in cryptocurrency.
In April 2018, the SBP issued a circular to all banks and payment system operators, instructing them to refrain from processing transactions involving cryptocurrency. The circular stated that cryptocurrency was not legal tender in Pakistan and that any transactions involving cryptocurrency would be at the risk and responsibility of the individual or entity involved.
In March 2019, the Securities and Exchange Commission of Pakistan (SECP) issued a statement warning the public about the risks of investing in cryptocurrency. The SECP stated that cryptocurrency was not a legal tender in Pakistan and that there was no regulatory framework around it.
In December 2020, the government of Pakistan announced that it was planning to launch a digital currency by 2025. The State Bank of Pakistan is leading the initiative, and the digital currency is expected to be backed by the central
In conclusion, cryptocurrency is gaining popularity in Pakistan, but the regulatory framework around it is still unclear. While there are potential benefits to using cryptocurrency, such as financial inclusion and faster cross-border payments, there are also risks involved, such as lack of regulation and volatility. It is important for individuals to fully understand the risks and benefits before investing in cryptocurrency.
The Pakistani government should take steps to regulate cryptocurrency to protect investors and prevent fraudulent activities. The launch of a digital currency backed by the central bank could be a positive step towards this goal. As the use of cryptocurrency continues to grow in Pakistan, it is important for the government to keep up with the global trend and adopt a clear regulatory framework to ensure its safe and legal use in the country.