Kostyantyn Kryvopust: Pakistan’s finance minister says the country will never legalize cryptocurrency, citing FATF rules

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Pakistan’s finance minister has said the country will not legalize cryptocurrency trading, citing Financial Action Task Force (FATF) rules.

On Wednesday, Pakistan’s Minister of State for Finance, Aisha Ghaus stated that the government cannot allow cryptocurrency trading due to the country’s recent withdrawal from the FATF gray list.

“A license to trade cryptocurrency cannot be granted,” she said during a meeting of the Senate’s standing committee on finance and revenue.

“Cryptocurrency will not be allowed. We cannot deal with cryptocurrency. Now that we are out of the FATF, this is an area we should avoid. Cryptocurrency can also lead to financial terrorism, we don’t get a deal with the IMF anymore, they need a little justification against us.”

Last October, the FATF excluded Pakistan from its list of countries under “enhanced monitoring”, saying the country had “addressed technical deficiencies to meet the commitments of its action plans”.

Since 2018, Pakistan has been on the “grey list” of global money laundering and financing controls.

The FATF is an intergovernmental organization that deals with the fight against money laundering and terrorist financing. Since 2000, the watchdog maintains “black” and “gray” lists.

Gray-listed countries face restrictions in the financial services sector, while black-listed countries may face economic sanctions from FATF members.

Pakistani officials are calling for a ban on cryptocurrency

While Pakistan still hasn’t legalized cryptocurrencies, the country hasn’t banned the digital asset class either. However, that could change as some politicians advocate banning the industry.

First, Senator Farooq Naek called for a complete ban on cryptocurrencies, citing the risks of financing terrorism, as well as the speculative nature of cryptocurrencies.

Additionally, the State Bank of Pakistan (SBP), the country’s central bank, has reportedly described cryptocurrencies as a complete fraud that will never be recognized in the country.

House also said that the central bank has started working on banning cryptocurrency trading.

“The State Bank of Pakistan (SBP) and the Ministry of Information Technology have started working on banning cryptocurrencies,” she said, adding that the FATF has also imposed conditions and cryptocurrencies will not be allowed.

Pakistan has seen a surge in cryptocurrency adoption in recent years as the country suffers from high inflation and a high level of unbanked population. According to the World Bank, more than 100 million adults in the country do not have a bank account.

According to Chainalysis, a blockchain data platform, the country ranked third in the 2021 Global Crypto Adoption Index. However, in 2022 it dropped to sixth place.

In a 2021 report, the Political Advisory Board of the Federation of Pakistan Chambers of Commerce and Industry revealed that Pakistanis have invested approximately $20 billion in cryptocurrencies.

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