Bitcoin Regulations Soon to Hit Pakistan

Pakistan, one of the 10 countries where cryptocurrencies are strictly banned, is reshaping its stance on bitcoin (BTC) and other cryptocurrencies in the upcoming months. Recently, the federal government announced that it will be introducing Electronic Money Institutions (EMIs) regulations as suggested by The Financial Action Task Force (FATF).

FATF, comprised of 38 members, is a policy-making body in Pakistan that supervises international financial activities and set standards to prevent illicit activities such as money laundering, terrorist financing and all the activities that may harm the international financial system. In addition, FATF also monitors the techniques used by its members and their overall progress against illegal activities. FATF had recommended the federal government of Pakistan to take the initiative to regularize digital currencies.

The State Bank of Pakistan (SBP) issued a statement regarding the EMI regulations. SBP stated that regulations were aimed to ‘foster innovation in the payments industry’ and ‘promote financial inclusion’ in the country. This shows that SBP finds potential in digital currencies and considers services and products encompassing digital currencies to be necessary for individuals and businesses. SBP has released the EMI regulations and laid criteria for firms interested in getting EMI licenses.

While Pakistan encourages non-banking payment solutions at one instance, it allows SBP to control all these EMIs with the latest framework devised on another occasion. SBP is allowed to reject or cancel the license of any EMI at any time. All EMIs are required to report their activities and businesses to SBP. Moreover, they are also required to submit their audits through SBP approved auditors to SBP. Initially, an entity should possess the startup capital of PKR 200 million before applying for EMI license and afterward, it should have minimum ongoing capital.

In the past, Business Recorder reported quoting sources that Pakistan’s premier intelligence agency has put forward its recommendations to Asad Umer, foreign minister of Pakistan, to legalize bitcoin and other cryptocurrencies.

Apart from legalizing cryptocurrencies, the agency proposed Asad Umer (Finance Minister) to register 5,000 cryptocurrency exchanges and dealers and categorize crypto as investments subjected to capital gains tax. Against all odds, crypto developments are now taking place in Pakistan to collect taxes on crypto activities that mostly go unnoticed. The economy of the country has been in a recession, trying to combat inflation. One of the biggest hurdles faced by Pakistan’s developing economy is tax evasion. For many decades, large scale tax evasions and corrupt practices have thwarted economic growth of the country. While the sitting government is taking measures to tackle them, tax evasions through cryptocurrencies executed under the belt were overlooked by the country. That’s why the recent proposition to the finance minister revolved mainly around imposing the tax, forming a task force and devising a regulation plan for all current crypto activities that go otherwise completely unnoticed. It was noted that illegal trades were expanding at a growth rate of 400% every year which proves that the government’s attention toward this sector is a sensible move.

Pakistan’s economy is dependent on banks that offer centralized solutions which don’t accommodate inflation. Bitcoin, along with offering decentralized anti-inflation traits, can provide relief to people who are engaged in transferring money overseas through banks, incurring high fees and often requiring time to confirm transactions. In the recent past, Pakistani government has introduced several reforms in ease of doing business and minimizing trade gap. While attempting to do so, several import duties such as duties on industrial machinery and heavy machinery for oil and gas exploration were removed.

There are many aspects that remain unfamiliar to Pakistan when it comes to the regulation of cryptocurrencies. For the future, the agency has laid several recommendations to the finance minister regarding monitoring of cryptocurrencies. These include scrutinizing models already deployed by different companies, establishing a special department within the State Bank of Pakistan (SBP) to track trades and explore its impact, setting up an investigation agency, training and managing human resource and creating a framework for Initial Coin Offering (ICO). All the plannings forwarded to the finance minister of Pakistan called for a timely implementation coming in June 2019 and December 2019.

Pakistan’s premier intelligence agency’s efforts show that Pakistan has recognized the need for devoting time and efforts to cryptocurrencies. Whether the country is ready yet for this or not remains unexplored. While the government has clearly worked on the technical and legal aspects of regulating cryptocurrencies, it remains to be seen if efforts will be made to raise awareness about the same among the citizens. Parallel to the country’s plan for implementing rules and regulations stands the government’s strategy for ensuring that people are well-informed and capable to make use of cryptocurrencies. One cannot succeed without the other.

Fatir Malik

Electrical engineer by profession, turned into blockchain developer. Fatir contributes regularly with his insights about latest developments in fintech sector. Contact the editor at

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