The State Bank of Pakistan (SBP) has declared cryptocurrency as illegal money in the country.
“Virtual Currencies/Coins/Tokens (like Bitcoin, Litecoin, Pakcoin, OneCoin, DasCoin, Pay Diamond etc.) are neither recognized as a Legal Tender nor has SBP authorized or licensed any individual or entity for the issuance, sale, purchase, exchange or investment in any such Virtual Currencies/Coins/Tokens in Pakistan,” a senior central banker said.
Further, Banks/ DFIs/ Microfinance Banks and Payment System Operators (PSOs)/ Payment Service Providers (PSPs) have been advised not to facilitate their customers/account holders to transact in Virtual Currencies/ Initial Coin Offerings (ICOs) /Tokens vide BPRD’s Circular No. 03 of 2018.
The SBP emphasized that these currencies, such as Bitcoin and Litecoin, are not recognized as legal tender and have not been authorized or licensed by the State Bank for any issuance, sale, purchase, exchange, or investment in Pakistan.
Financial institutions and payment service providers have also been advised against facilitating transactions involving virtual currencies or initial coin offerings (ICOs) and tokens, according to BPRD’s Circular No. 03 of 2018.
The SBP highlights the high degree of anonymity associated with virtual currencies, which can potentially be exploited for illegal activities. It further emphasizes that due to the ambiguous nature of these currencies, individuals have no legal protection or recourse in case of losses resulting from the following risks:
a) High price volatility, as investments tied to virtual currencies are highly unstable and speculative.
b) Possible failure or closure of virtual currency exchanges or businesses, including actions by law enforcement agencies.
c) Security compromises and hacking incidents targeting cryptocurrency exchanges and wallet businesses, which have resulted in significant fund losses worldwide.
The SBP also alerts the general public in Pakistan to be cautious of fraudulent investment schemes and coins resembling pyramid or Ponzi schemes. Fraudsters often promise high returns, leading to substantial losses for unsuspecting individuals.
The SBP reminds the public that domestic and international payment and money transfer services in Pakistan are regulated by the bank under applicable laws.
It emphasizes that no entity is currently authorized or licensed by the SBP to offer money remittance services or products in Pakistan using virtual currencies or tokens. Individuals using virtual currencies for value transfers outside Pakistan are subject to prosecution in accordance with applicable laws.
In light of these developments, the SBP advises the general public to exercise caution and refrain from engaging in activities involving virtual currencies. Mining, trading, exchanging, transferring value, promoting, or investing in virtual currencies can potentially lead to financial losses and legal implications.