Speaking at a panel discussion at the Karachi Literature Festival, SBP governor Reza Baqir spoke about cryptocurrencies and blockchain. The manager said that blockchain technology is “absolutely useful” because it can solve financial problems and many other problems faced by governments around the world.
However, each innovation has advantages as well as threats. Bakir explained that cryptocurrencies are based on useful technology, and it is difficult for law enforcement agencies to trace who makes transactions and for what purpose. Therefore, cryptocurrencies can be used for money laundering, trafficking in illicit items and the like, the Pakistani central bank governor fears
“The main objective of SBP is to make financial services more accessible to the public to limit the misuse of the financial system. We need to strive to maintain a balance so that the risks of the latest technology do not outweigh its merits”.
Pakistan is on the Financial Action Task Force (FATF) gray list. Although cryptocurrencies are not banned in Pakistan, Baqir believes a change in approach to regulating the industry is necessary, working out clear regulatory rules that cryptocurrency firms and miners must abide by.
Last March, Pakistan had already established a KP Crypto Advisory Committee, which consults with industry experts to develop legislative regulation of mining and crypto-assets. Recently, local media reported that due to the unfriendly stance of the Central Bank of Pakistan, the country’s authorities may completely ban the use of cryptocurrencies.