Last week, Pakistan’s Minister of Finance, Dr. Aisha Ghaus Pasha, made a significant announcement declaring that cryptocurrency would never be legalized in Pakistan. This decision was made based on the conditions set by the Financial Action Task Force (FATF), an intergovernmental body focused on combating money laundering and terrorist financing.
Following the minister’s statement, the State Bank of Pakistan (SBP) and the Ministry of Information Technology initiated actions to work towards implementing a ban on cryptocurrency in the country. Sohail Jawad, the Director of SBP, supported this stance by emphasizing the high risks associated with crypto transactions. He also highlighted a large number of existing cryptocurrencies, with the market experiencing a significant decline from $2.8 trillion to $1.2 trillion.
During a session of the Senate Standing Committee on Finance and Revenue, concerns were raised by Senator Saleem Mandviwalla regarding the billions of dollars invested in the cryptocurrency market. In response, the SBP official assured that the Federal Investigation Agency (FIA) and the Financial Monitoring Unit (FMU) are actively addressing these concerns.
The ban on cryptocurrency in Pakistan is driven by the country’s efforts to maintain a favorable position on the FATF’s list and to improve its records on Anti-Money Laundering and Counter-Terrorist Financing. While cryptocurrencies were previously in a gray area under Pakistani law, neither illegal nor regulated, the SBP recommended their prohibition in January 2022. Despite the popularity of crypto adoption in the country, the government has consistently expressed anti-crypto sentiments.
Pakistan, recognizing the importance of technological advancements, is also investing in artificial intelligence (AI). The government aims to train one million IT graduates in AI and Allied Technologies by 2027. To achieve this goal, they plan to enlist at least 10,000 new trainers who can impart high-impact AI education. Additionally, the Ministry of Information Technology and Telecommunication aims to fund 1,000 AI-led research and development initiatives and file over 2,000 AI-related patents by 2026.
In light of the risks associated with cryptocurrencies, the SBP has taken a firm stance on the matter. Sohail Jawad, the Director of SBP, emphasized the need to protect investors and the financial system from potential threats posed by the volatile and unregulated nature of cryptocurrencies. With over 16,000 types of cryptocurrencies currently in existence, the market has experienced significant fluctuations in value, prompting concerns over potential financial losses and instability.
The decision to ban cryptocurrency in Pakistan has raised concerns among investors who have previously engaged in the crypto market. Senator Saleem Mandviwalla from the Pakistan Peoples’ Party (PPP) voiced these concerns during the Senate Standing Committee on Finance and Revenue session. To address these apprehensions, the SBP official assured that the Federal Investigation Agency (FIA) and the Financial Monitoring Unit (FMU) are actively monitoring and addressing any potential issues related to investments in the cryptocurrency market.
The ban on cryptocurrency marks a significant shift in Pakistan’s approach to digital assets. Previously, the country had been recognized for its relatively high crypto adoption, ranking third in the Global Crypto Adoption Index in late 2021. However, the recommendation by the SBP to ban cryptocurrencies in 2022 caused a decline in Pakistan’s ranking, dropping to sixth place. The government’s decision reflects its commitment to aligning with international standards and mitigating the risks associated with digital currencies.
While the ban on cryptocurrencies may disappoint some individuals and businesses involved in the crypto market, Pakistan is concurrently focusing on the development and adoption of artificial intelligence (AI) technologies. Recognizing the potential of AI in driving economic growth and innovation, the government has set ambitious goals to train a significant number of IT graduates in AI and Allied Technologies by 2027. The aim is to bridge the existing skills gap and ensure a proficient workforce capable of harnessing the benefits of AI across various sectors.
In addition to investing in education and training, the Ministry of Information Technology and Telecommunication has outlined plans to fund AI-led research and development initiatives in both academic and private sectors. By encouraging the filing of AI-related patents, Pakistan aims to promote indigenous innovation and establish itself as a hub for AI research and development. These initiatives demonstrate the government’s commitment to leveraging emerging technologies and positioning Pakistan as a technologically advanced nation.
Pakistan’s decision to ban cryptocurrency reflects its commitment to international standards and efforts to combat money laundering and terrorist financing. While concerns have been raised by investors, the government has reassured that measures are in place to address these concerns. Concurrently, Pakistan is actively investing in AI to foster technological growth and establish itself as a center of AI innovation. These developments showcase the country’s determination to navigate the evolving digital landscape while safeguarding its financial system and promoting technological advancement.