Under the directions of the Pakistani central bank i.e. State Bank of Pakistan (SBP), at least a thousand banking customers’ accounts, as well as their electronic cards, have been blocked because they were trading cryptocurrencies. It was further noted in the press that the persons were utilizing banking sources to fund their crypto trading accounts with offshore exchanges. A sense of confusion amongst Pakistani crypto investors is prevailing at the moment.
As per the local media in Pakistan, SBP was contacted by the Federal Investigation Agency (FIA) of Pakistan. FIA apprised SBP that certain financial institutions have been used by their customers for sending payments abroad. However, there wasn’t any problem with customers sending payments abroad through banking channels, yet FIA was concerned about funds transfer for crypto trading.
FIA told SBP that a huge worth of transactions has been taking place by the customers for crypto trading. It was told that US$ 288,000 was transferred from local Pakistani banks into the foreign crypto accounts of customers maintained with crypto exchanges. FIA requested SBP to immediately pass a directive informing the banks to stop such payments.
While acting upon the request of FIA, SBP issued directives to the banks and empowered them to immediately suspend such customers’ accounts. It was later confirmed that approximately 1000 accounts belonging to banking customers were blocked. Subsequently, the electronic payment cards of the customers too were blocked permanently until further instructions.
The action against the Pakistani customers was taken under the pretext of a policy that was issued by SBP as far back as 2018. The very policy restricted Pakistanis from engaging with digital currencies either locally or through foreign firms.
However, this is a fact that Pakistanis have been heavily investing in digital currencies, although the ban is in place. As a matter of fact, Pakistanis have pooled in more than US$ 20 Billion as an investment in digital currencies in 2021 alone. But since they cannot trade cryptocurrencies locally nor they can acquire them in Pakistan, they trade cryptocurrencies outside Pakistan.
A High Court in Pakistan is also looking at the litigation which involves cryptocurrencies. Even the Court has raised questions over the use of cryptocurrencies in Pakistan. In this context, the Court has sought information from the Government of Pakistan to apprise the Court about cryptocurrencies and their legal status. The case is however still pending and no report on the status of cryptocurrencies in Pakistan has been provided by the Government so far.
It is also on record that SBP had many times in the past refuted that it had never imposed a ban on cryptocurrency. However, it has admitted the fact that there are no laws pertaining to the use of digital currencies in Pakistan currently. The blocking of the customers’ accounts, therefore, seems inappropriate if there was no ban at all.
