Bitcoin, the decentralised digital currency, has been around for more than a decade, but it remains a controversial topic in many countries. One such country is Pakistan, where the use of bitcoin is illegal. In this article, we will explore why bitcoin is illegal in Pakistan and what the future of digital currencies looks like in the country.
The State Bank of Pakistan (SBP), the central bank of the country, issued a circular in April 2018, stating that all banks, payment system operators, and financial institutions should refrain from dealing in cryptocurrencies. The circular cited various risks associated with digital currencies, such as money laundering, terrorist financing, and fraud, as the main reasons for the ban.
The SBP also warned that any individual or entity found violating the prohibition would be subject to legal action. The ban extends to all digital currencies, including bitcoin, ethereum, and ripple.
The decision to ban bitcoin in Pakistan was not an isolated one. Many central banks around the world have expressed concern about the use of digital currencies, citing similar reasons. However, some countries have taken a more progressive approach, such as Japan, which legalised bitcoin in 2017.
Pakistan’s ban on bitcoin has been controversial, with some arguing that it is stifling innovation in the country. Many people in Pakistan are interested in digital currencies, and some have even invested in them, despite the ban.
There are several reasons why Pakistan’s government has taken such a hardline approach to digital currencies. Firstly, the country has a significant problem with money laundering and terrorist financing. Digital currencies can be used to move money anonymously, making it difficult for authorities to track the flow of funds.
Secondly, Pakistan’s economy is heavily regulated, and the government wants to maintain control over the financial system. Digital currencies are decentralised, meaning that they operate outside of the traditional banking system, which is a threat to the government’s control.
Finally, Pakistan’s government is wary of the speculative nature of digital currencies. The value of bitcoin and other cryptocurrencies can be highly volatile, and there is a risk that people could lose significant amounts of money.
Despite the ban, some people in Pakistan continue to use bitcoin and other digital currencies. They do so through peer-to-peer marketplaces or by using overseas exchanges. However, these methods come with their own risks, such as fraud and hacking.
The ban on bitcoin in Pakistan has not stopped the growth of digital currencies in the country. In fact, many people in Pakistan are interested in blockchain technology, which underpins bitcoin and other cryptocurrencies. Blockchain has the potential to revolutionise many industries, such as finance, healthcare, and logistics.
There are signs that the Pakistani government is starting to take a more progressive approach to digital currencies. In 2020, the Pakistan Telecommunication Authority (PTA) issued a statement saying that it was exploring the use of blockchain technology for various applications, such as secure data storage and digital identity management.
Conclusion:
In conclusion, the ban on bitcoin in Pakistan is a controversial issue, with arguments for and against it. The government’s concern about money laundering, terrorist financing, and financial stability is understandable, but it is also important to consider the potential benefits of digital currencies.
The ban has not stopped the growth of digital currencies in Pakistan, and there are signs that the government is starting to take a more progressive approach to blockchain technology. As the world becomes increasingly digital, it is important for countries to stay up-to-date with technological advancements and find ways to regulate them in a way that benefits society as a whole.