Pakistan Cracks Down on Cryptocurrencies, Citing Fraud and Risks
In a recent development reported by independentturdu, Pakistan’s Minister of State for Finance and Taxation, Aisha Ghaus Pasha, announced on May 16 that the country will prohibit the operation of cryptocurrency services and will never legalize cryptocurrency transactions.
The Central Bank of Pakistan, along with other entities, is currently drafting the ban legislation. This decision comes as the Senate Standing Committee on Finance directed the implementation of legislation to curb the use of cryptocurrencies in the country.
During the committee meeting, Minister Aisha Ghos Pasha emphasized that the ban on cryptocurrencies will be enforced through new legislation. She informed the committee that the State Bank of Pakistan and the Ministry of Information Technology have already initiated efforts to ban cryptocurrencies within the country.
Echoing these sentiments, Digital State Bank Executive Director Sohail Jabbar expressed concerns about the fraudulent nature of cryptocurrencies. He highlighted a significant decline in the cryptocurrency market from $2.8 trillion to $1.2 trillion. Furthermore, he emphasized that the Federal Investigation Agency (FIA) and Financial Monitoring Unit (FMU) are taking action against Pakistani investments in cryptocurrencies, with over 16,000 different types of cryptocurrencies identified. He also mentioned that China has also banned cryptocurrencies.
Chairman of the Securities and Exchange Commission of Pakistan (SECP), Akif Saeed, reminded the committee that in 2017, banks were prohibited from investing in cryptocurrencies. He supported the ban, stating that cryptocurrencies are high-risk assets with no real benefits, and major countries are increasingly scrapping them.
Salim Mandviwala, the Chairman of the Senate Standing Committee on Finance, raised concerns about the substantial amount of money invested in cryptocurrencies by Pakistanis. In response, Minister Aisha Ghos Pasha stated that the Financial Action Task Force (FATF) has also imposed conditions regarding cryptocurrency, and Pakistan should avoid dealing with it, especially after successfully addressing FATF concerns.
Senator Farooq H. Naik, a committee member from the Pakistan Peoples Party (PPP), suggested punitive measures against those involved in cryptocurrencies and called for formal legislation on the matter. He emphasized the potential risks of cryptocurrencies, including their potential use for financial terrorism and the need to avoid giving any excuses to international financial institutions, such as the International Monetary Fund (IMF).
The committee also discussed the issue of increased fees by non-banking finance companies, which the SECP clarified were necessary to prevent financial losses. Additionally, Minister Aisha Ghos Pasha mentioned that the upcoming budget for the new financial year will focus on bringing new sectors into the tax net to increase the tax-to-GDP ratio and reduce the burden of taxes on the common man. Chairman of the FBR, Asim Ahmed, informed the committee about the collection of nine billion rupees through the Capital Value Tax and clarified that the tax aimed to include high earners and individuals with assets in the tax net.
Minister Aisha Ghos Pasha assured the media that Pakistan intends to continue its program with the IMF and is actively working to reach an agreement. Regarding the upcoming budget, she emphasized that efforts would be made to provide relief to the people, even in challenging economic conditions.
The finalized budget numbers will be presented in the first week of June, and increasing the tax net remains a crucial priority for the country. The minister highlighted the government’s focus on controlling smuggling and reducing the budget deficit to alleviate the burden on the people.
Overall, Pakistan’s decision to ban cryptocurrency services and strengthen taxation measures reflects the government’s concerns about the risks associated with cryptocurrencies and its determination to regulate financial transactions effectively.
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