- Proposed amendments include penalties for unapproved digital currency issuers to ensure a regulated environment.
- Potential introduction of a Central Bank Digital Currency (CBDC) to facilitate digital transactions.
The State Bank of Pakistan (SBP) has outlined proposals to officially recognize digital assets, including cryptocurrencies, as legal tender. This move, spearheaded by SBP Governor Jameel Ahmad during a Monetary Policy Committee (MPC) meeting, signals a potentially transformative period for Pakistan’s financial landscape regarding digital currencies.
The proposals detailed by the MPC suggest modifications to the existing financial regulations that would allow state banks to issue digital currencies. Furthermore, these changes aim to impose stringent penalties on any entities issuing digital currencies without the necessary approvals, establishing a controlled framework for cryptocurrency operations.
These legislative changes are pending further approval from the government. If ratified, they would pave the way for the introduction of a central bank digital currency (CBDC), possibly taking the form of a digital rupee.
Moreover, the amendments are designed to enable state banks to support various blockchain-based transactions, which would include the buying, selling, and trading of cryptocurrencies under regulated conditions.
Historically, the MPC has maintained a cautious stance on cryptocurrencies. In 2023, Aisha Ghaus Pasha, the then Minister of State for Finance and Revenue, suggested a ban might be imminent, reflecting the committee’s reservations.
However, the appointment of Muhammad Aurangzeb as the new minister in March 2024 marked a noticeable shift towards a more open approach to cryptocurrency.
The MPC’s announcement was coupled with a decision to reduce interest rates by 2.5%, a move influenced by decreased food inflation, stable global oil prices, and constant energy tariffs. This rate cut is viewed as a positive sign for Pakistan’s economic prospects, with the MPC projecting real GDP growth of 2.5% to 3.5% for the fiscal year 2025.
Pakistan’s journey towards cryptocurrency integration represents a notable change from its previous regulatory posture. The SBP had previously prohibited financial institutions from facilitating cryptocurrency transactions in 2018, citing concerns over volatility and potential illegal activities.
